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China Wind Power Report·2007
Authors
Li Junfeng Gao Hu Shi Pengfei Shi Jingli
Ma Lingjuan Qin Haiyan Song Yanqin
Greenpeace Coordinators
Yang Ailun Liu Shuang Niu Jitao
GWEC Coordinator
Steve Sawyer
China Environmental Science Press·Beijing
Preface
Wind power is sustainable and clean energy. Compared with conventional energy, generating electricity from the
wind does not need fuel; hence there is no risk of a fuel price rise. There are no environmental costs, such as carbon
emissions, in the generation process. Wind power has the added advantage that it is widely available worldwide.
In many countries wind power has become a major part of their plans for sustainable development. According to the
Global Wind Energy Council, the wind industry has been expanding at an annual growth rate of 28% over the past ten
years. Global cumulative installed capacity has reached 74GW and the level of annual investment about €18 billion. In
2006, wind power investment in China was RMB 16.27 billion yuan, accounting for 9% of the global total. If its growth
rate is maintained, China could become the largest wind market in the world.
China is rich in wind resources. The technically exploitable resource is 1,000GW, distributed across the southeast coastal
areas, adjacent islands, Inner Mongolia, Xinjiang, the Gansu Hexi Corridor, Huabei and the Qinghai-Tibetan Plateau.
China has chosen wind power as an important alternative source in order to rebalance the energy mix, combat global
warming and ensure energy security. Supportive measures have been introduced. In order to encourage technical
innovation, market expansion and commercialisation, development targets have been established for 2010 and 2020,
concession projects offered and policies introduced to encourage domestic production.
By the end of 2006, cumulative installed wind capacity had reached 2.6GW; the average annual growth rate over
the past ten years has been 46%. Between 2004 and 2006, China's ranking in the world wind energy league moved
up from the top 10 to the top 6, and the country is planning to host some of the biggest wind farms in the world. At the
present growth rate, the 2010 target will be reached two years earlier. Wind power has not just contributed to supplying
electricity but has lowered supply costs, reduced carbon emissions and helped to limit air pollution.
The growing wind power market has encouraged domestic production of wind turbines. By the end of 2006 there
were more than 40 companies involved in manufacture. Domestic products accounted for 41.3% of the annual market
in 2006, an increase of ten percentage points. During the construction of more than 100 wind farms, a lot of experience
and expertise has been gained in construction and operation. This is fundamental for the future development of wind
power. Although grid-connected wind power is the current area of development in China, the off-grid market is the
largest in the world, particularly for rural electrification.
The year 2007 is a key point in the growth of the wind industry in China. After one year's operation of the Renewable
Energy Law, a number of problems for wind development need to be solved urgently. This report analyses the
development of China's wind industry and the implementation of national policies, points out the challenges to be met
and makes a realistic prediction of the wind market in the future. It therefore provides valuable information for both
policy makers and the business community.
The report has been compiled by the Chinese Renewable Energy Industry Association with the support of
Greenpeace and the Global Wind Energy Council. Sincere thanks go to the following experts, companies and
institutions for their contributions: the Energy Research Institute, the China Hydropower Engineering Consulting
Group, the Chinese Wind Energy Association and the Solar and Wind Energy Resource Assessment Programme.
1 Resources and Development Potential
1.1 China’s wind energy resource
1.2 Supply and demand
2 Present Status of Development
2.1 Development of grid-connected wind farms
2.2 Installed capacity of wind power
2.3 Wind power development and the
Concession Programme
2.4 Off-grid wind power generation
3 Development of Wind Turbine
Manufacture in China
3.1 Wind turbine production
3.2 Components and accessory production
3.3 Profiles of major wind power companies
4 Prices for Wind Power Generation
4.1 History of wind power pricing systems
4.2 Current pricing policy for wind power
4.3 Effects of wind power pricing policy
4.4 Trend of wind power pricing policy
5. Wind Power Concession Projects
5.1 Concession bidding and evaluation
procedure for wind power
5.2 Outline of the concession bidding
procedure for wind power
5.3 Analysis of the results and impacts of
concession project bidding
6 Wind Power and the Environment
6.1 Environmental Benefits of Wind Power
6.2 Environmental Impacts of Wind Power
7 Key Regions for Wind Power Development
7.1 Inner Mongolia Autonomous Region
7.2 Hebei Province
7.3 Liaoning Province
7.4 Jilin Province
7.5 Guangdong Province
7.6 Xinjiang Uighur Autonomous Region
7.7 Jiangsu Province
7.8 Shandong Province
8 Development Outlook and
Policy Recommendations
8.1 Lessons Learned
8.2 Issues for wind power development
8.3 Risks involved in investing in wind power
8.4 Development Perspectives
8.5 Policy recommendations
Figures & Tables
Contents
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Resources and Development Potential 001
Resources and Development Potential1
China Wind Power Report · 2007 002
1.1 China's wind energy resource
Throughout China's vast land mass and long coastline
there is a rich resource of wind energy with great
development potential. In the late 1980s and during
2004-2005, the National Meteorological Bureau conducted
the second and third general investigations of the resource,
concluding that at 10 metres height above ground, the
theoretically exploitable wind resource was 3,226GW and
4,350GW respectively, and the technically exploitable
wind resource 253GW and 297GW. In addition, the United
Nations Environment Programme (UNEP) organised an
evaluation of the wind energy resource in China by using
a data modeling method. This concluded that at 50m
above ground level the technically exploitable wind energy
resource would reach 1,400GW. In 2006, the National
Climate Center also applied a data modeling method to
assess the wind energy resource in China, concluding
that at 10 m height above ground level, and without taking
into account the Qinghai-Tibet Plateau, the technically
exploitable wind energy resource is about 2,548GW.
This is much larger than the outcome of the third general
investigation①.
According to the results of the third general investigation,
the technically exploitable land area (with a wind power
intensity of over 150W/m2) is approximately 200,000km2.
Taking a ratio of 3-5MW/km2, the resulting exploitable
wind power capacity would be 600-1,000GW. According
to the Report on Coastal Resources, there is a further
157,000 km2 of coastal areas round China where the
water depth is 0-20m. In 2002, a National Plan on Ocean
Usage was published, which designated areas suitable
for shipping, fishing, entertainment and industrial uses.
Taking this into account, if wind power can be realised at
a density of 5MW/km2 over 10%-20% of the ocean area,
then the installed capacity of offshore wind power could
reach 100-200GW. In summary, there is a huge wind
power potential in China, of around 700-1,200GW, which
could play a significant role in the country’s future energy
supply.
The richest wind energy resources are distributed along
the south-eastern coastal areas and its adjacent islands
as well as in the north (north-east, north and north-west
China). There are also some parts of inland China that are
rich in wind resources, as well as off-shore.
1. The most abundant wind resources along the coast
and islands include the provinces of Shandong, Jiangsu,
Shanghai, Zhejiang, Fujian, Guangdong, Guangxi and
Hainan. Areas within 10 km of the coast have an annual
wind power density above 200W/m2.
2. The most abundant wind resources in the north
include Heilongjiang,Jilin,Liaoning, Hebei, Inner Mongolia,
Gansu, Ningxia and Xinjiang; this area is about 200km
wide. The wind power density ranges from 200W/m2
up to 300 W/m2 and sometimes even reaches above
500W/m2, for example in the Ala mountains, Dabancheng,
Huitengxile, Huitengliang of Xilinhaote and the Chengde
hunting grounds.
3. In inland regions outside the two areas described
above, the general wind power density is below 100W/m2.
In some areas located influenced by lakes or other special
geographic conditions, the wind resources can also be
considerable.
4. The most abundant wind resources off-shore can
be found in vast areas along the eastern coast with a
water depth of 5-20 metres. Because it is limited by other
factors, the technically exploitable potential in off-shore
areas is still less than on land. In some areas, however,
such as Jiangsu, Fujian, Shandong and Guangdong, there
is a large off-shore resource located close to centres of
power demand. With the development of off-shore wind
① China Meteorology Bureau. China Wind Resource Assessment Report. December 2006.
Resources and Development Potential 003
technology and improvements in its economic viability,
these areas will play an important role in the future.
1.2 Supply and demand
China's wind and hydro resources complement each
other in their seasonal variation. The wind resource is
abundant in the spring, autumn and winter but poor in
summer. The hydro resource is abundant in the summer.
In south China, the rainy season is from March to June
or April to July, during which time the rainfall accounts for
50%-60% of the annual total. In north China, the average
rainfall is much less than in the south, with winter as the
dry and summer as the rainy season. This perfect match
between the wind and hydro resources will enable large
scale wind power development to compensate for the lack
of electricity generation from hydro-power in the spring
and winter.
However, the geographical distribution of the wind
resource does not fit well with the country's power load
profile. Coastal regions with a large power load have fewer
areas with rich wind resources than the northern areas with
abundant wind resources but relatively smaller demand.
This creates difficulties for the economic development
of wind power. As most of the areas with abundant wind
resources are far away from the power load centres, and
the grid network is relatively weak, grid reinforcement is
needed to support the development of large scale wind
power.
China Wind Power Report · 2007 004
Present Status of Development2
Present Status of Development 005
2.1 Development of grid-connected wind farms
Grid-connected wind power started to develop in the
1980s, but grew rapidly during the 10th Five-year Plan,
with total installed capacity increasing from 350MW in
2000 to 2,600MW in 2006. The average growth rate during
this period was nearly 40%. In 2006 alone, the growth rate
was 105%. The installed capacity of wind power in China
enabled the country to move from No.10 in the world to
No.6 by the end of 2006①.
There have been three stages in the development of
grid-connected wind farms②:
In the initial demonstration period (1986-1993), the
main activity was to build small-scale demonstration wind
farms by utilising grants from foreign donor countries and
loans. Support from the government was mainly in terms of
financial backing, such as investment in wind farm projects
or in the development of wind turbines.
In the industrial isation period (1994-2003), the
former Ministry of Electric Power proposed a wind power
industrialisation programme, including the early stages of
wind farm construction, at a “National Wind Power Work
Meeting” in 1993. The following year it was decided
that the grid utility should facilitate the connection of wind
farms to the nearest grid and all the electricity generated
by wind farms should be purchased. The grid tariff would
be calculated as the sum of power generation costs, loan
payments and a reasonable profit. The difference between
the wind electricity price and the average electricity price
would be shared across the whole grid, with the power
company responsible for purchase of the electricity. As
the security of investors was guaranteed, development of
wind farms started through loans. Later, the State Planning
Commission laid down that the average electricity price
for wind power should be calculated according to the
operational period of the turbines and the loan payment
period extended over 15 years. In addition, value-added
tax was reduced by half to 8.5% for wind power projects.
However, with the reform of the electricity supply system
and its transformation into a competitive market, the wind
power industry developed slowly due to its high cost and
vague policy support.
In the scaling-up and domestic production period
(2003-2007), the National Development & Reform
Commission aimed to commercialise the wind industry
by initiating a wind power concession programme in
2003, since when it has been held annually. Under this
the investors and developers of wind power projects are
selected through bidding, with the aim to expand the rate
of development and improve the manufacturing capacity
of domestically made parts on the one hand, and to lower
power generation costs and reduce electricity prices on
the other. A Renewable Energy Law was introduced in
2006 which, together with other measures such as a
pricing policy, obligation on grid companies to purchase
renewable electricity, and cost distribution, has boosted the
development of renewable energy in China. As a result the
wind industry has move into a rapid growth phase.
2.2 Installed capacity of wind power ③
By the end of 2006, the number of wind turbines installed
in China amounted to 3,311 units, of which 366 were of
1MW capacity or above, accounting for 11% (Figure 1).
With a total installed capacity of 2,600MW. There were
100 wind farms distributed across 16 provinces (Table 1).
Compared to the cumulative capacity of 1,260MW at the
end of 2005, the growth rate in 2006 was 105% (see Figure
2). The estimated output of grid-connected wind power
in 2006 was 3,860GWh (calculated as the cumulative
① Global Wind Energy Council. Global Wind Energy Development Report. 2006.
② Li Junfeng, et al. Study of China Wind Power Price Policy. 2006.
③ Shi Pengfei. Statistics of Installed Capacity of Wind Power in China. May 2007.
006 China Wind Power Report · 2007
installed capacity at the end of the previous year plus
50% of the installed capacity of the current year and the
average equivalent full load hours of 2,000), an increase of
2,200GWh①in a single year.
In 2006, without taking into account the regions of
Hong Kong, Macao and Taiwan, there were 1,454 newly
installed wind turbines with a capacity of 1,337MW in 2006,
which is more than the total commissioned over the past
20 years. Among these, 263 were MW or larger capacity
wind turbines, accounting for 18% of the new installations.
Compared to the newly installed capacity of 503MW in
2005, the year-on-year growth rate reached 166% in 2006.
Although the majority of turbines in China are still 600kW,
750kW and 850kW capacity (see Figure 1), accounting for
80% of installed units and 75% of installed capacity, the
trend in the future will be towards MW models.
There were no major changes in the installed capacity
distribution by province, but the gap between them was
enlarged. The installed capacity in Inner Mongolia exceeded
500MW, accounting for one fifth of the total, followed
by Hebei, Jilin, Liaoning, Guangdong and Xinjiang with
installed capacities over 200MW. The number of provinces
with over 100MW increased from 7 in 2005 to 11 in 2006.
Heilongjiang, Shandong, Gansu and Jiangsu are among
those with a cumulative installed capacity of 100MW.
In terms of turbine manufacture, the market share
for domestic manufacturers increased in 2006 to 45%
(including joint ventures), among which Jinjiang Gold Wind
had the biggest share, with 33% of the total newly installed
capacity and 80% domestic output. Foreign manufacturers
shared 55%, among which Vestas of Denmark, Gamesa
of Spain and GE of the US took the biggest share, with
together 50% of the total newly installed capacity and over
90% of the foreign share.
① Calculated as the sum of cumulative installed capacity of last year and 50% of the increased this year; full-loaded operation period is 2000 hours.
Figure 1 Turbine capacity types installed at end of 2006
No. Province UnitsInstalled capacity
/kWNo. Province Units
Installed
capacity
/kW
1 Hebei 343 325,750 9 Fujian 90 88,750
2 Inner Mongolia 668 508,890 10 Shandong 161 144,600
3 Liaoning 334 232,260 11 Guangdong 377 211,140
4 Jilin 303 252,710 12 Hainan 18 8,700
5 Heilongjiang 186 165,750 13 Gansu 163 127,750
6 Shanghai 18 24,400 14 Ningxia 195 159,450
7 Jiangsu 68 108,000 15 Xinjiang 329 206,610
8 Zhejiang 57 33,250 16 Hongkong 1 800
China (without Taiwan) 3,311 2,598,810
Table 1 Installed capacity of wind power by province in 2006
Source: Shi Pengfei, Statistics of wind power installed capacity in China, May, 2007.
Present Status of Development 007
2.3 Wind power development and the Concession Programme
In order to increase the scale of development of the wind
power industry, the Chinese government conducted four
rounds of wind concession tendering programmes during
the period of 2003-2006. Eleven projects were approved,
with an installed capacity of 2.45GW. All the projects
have started construction, while only 650MW have been
completed, accounting for 25%. It is expected that they will
be fully completed by 2009.
The four rounds of concession tendering solved some
of the major problems that had hindered the development
of wind power before 2002. The programme clearly
regulated that wind power does not participate in power
market competition; the government promised a fixed price
for a specific amount of electricity generated (30,000 full
load hours); the grid company is obliged to purchase all
the electricity generated by wind power; the difference
between the wind power price and the conventional
power price is shared among the provincial grids; the grid
company is responsible for investment in the construction
of transmission lines and the connection between wind
farms and the nearest network; and local government is
responsible for construction of road access to the wind
farms as well as coordination of some preparation work.
As for the enforcement of these conditions and measures
to differentiate wind concession projects from regular
wind power projects, the provincial governments and
grid companies are responsible for signing concession
agreements and power purchase agreements with the
investors that win the bids. Some of these principles form
part of the Renewable Energy Law and are therefore
legally binding. In the fourth round of the wind concession
tendering programme in 2006, it was further decided to
bundle the bidding between developers and their chosen
Figure 2 Cumulative and annual installed capacity of wind power 1995-2006
008 China Wind Power Report · 2007
wind turbine suppliers. The wind concession programme
has therefore played a significant role in the promotion of
wind power development as well as domestic production of
wind turbines.
The main features of the wind concessions are as
follows:
1. Investors are selected through public tendering by
the government. The bidder who offers the lowest price
wins the bid. In 2005 the criteria were revised so that
the electricity price was given 40% of the total weight in
deciding the winning bids. This was further reduced to 25%
in 2006, and then in 2007 the winning criterion was set as
the bid closest to the average bidding price, excluding the
highest and lowest bids.
2. The concession period is set at 25 years.
3. The provincial grid company must sign a power
purchase agreement with the bid winners and purchase all
the electricity generated by the wind projects.
4. The difference between the wind power price and
that of conventional power must be shared across the
provincial grid users. From 2006, the price difference is
shared across the national grid.
5. The electricity price paid is divided into two stages
across the project’s lifetime. In the first period, the price
is the bidding price proposed by the bidders up to an
electricity generation level of 30,000 equivalent full load
hours. In the second period, the price is set as the average
electricity price in the power market.
On 5 January 2006, the National Development &
Reform Commission released “NDRC [2006] No. 13
document-Related Regulations regarding Renewable
Energy Power Generation”. This clearly stipulates that
“power enterprises should actively invest in renewable
energy power generation projects and accept the obligation
of a renewable energy power generation quota. The quota
allocation will be stipulated in other documents”. Since
this document mentions the future implementation of quota
obligations, the stated-owned power companies have
proposed very low bidding prices in order to win the wind
power projects and therefore reserve a quota of renewable
energy against the likelihood of these obligations.
Between 2003 and 2006 a total of 11 wind power
concession projects were agreed, with the highest bidding
price of 0.519 0Yuan/kWh and the lowest of 0.382 0Yuan/
kWh. The total tendered capacity was 1,650MW and the
total capacity eventually bid was 2,450MW. Table 2 shows
the bidding prices and the initial prices set after various
feasibility studies.
The calculation of the price is based on the normal
operation of mature turbine models. Since domestically made
parts for MW size turbines are still at a “running in” stage,
many problems are likely to be discovered and parts will
need to be improved after testing and operational experience.
Taking into account various risks, such as the difference
between the wind resource assessment and practical
conditions when the wind farms come into actual operation,
the potential lower efficiency of wind turbine operation and the
difficulty of grid connection, the electricity prices calculated in
the feasibility studies were set on the low side.
The actual bidding pr ice is then based on the
business strategy of the bidders and the final contract
price is the choice of the government decision makers
after comprehensive consideration of multiple factors.
The actual contract prices of wind concession projects
are therefore low, and are favourable neither for the
encouragement of equipment manufacture nor for local
economic development. It has therefore been suggested
that some key parameters of the process should be
recalculated, after two years’operation of the projects,
taking into account financial conditions, investment capital,
annual electricity sales and turbine performance, when
their real operating status can be judged.
Present Status of Development 009
① It is changed to provincial level project rather than a national concession project afterwards.
② Li Junfeng, et al. China Renewable Energy Develop Annual Report. 2007.
2.4 Off-grid wind power generation
Off-grid wind power is mainly used to provide electricity to
herdsmen, fishermen and peasants in areas not covered
by the grid. With an improvement in living standards and
the use of more household appliances, there is a greater
demand than the capacity of a single turbine. This has
phased out production of turbines of 50W capacity and the
production of 100W and 150W turbines has decreased as
well. Turbines in the 200W, 300W, 500W and 1kW range
are increasingly popular, accounting for 80%②of annual
production of off-grid turbines.
At present there are 70 companies involved in the
business of off-grid wind power generation, among which
Project Tendering capacity
/MW
Bidding capacity
/MW
Grid connected
power production in feasibility
study/equivalent
full load hours
Average price of
feasibility studies(Yuan/kWh)
Contract price
(Yuan/kWh)
Difference of contract price and average price in
feasibility studies(Yuan/kWh)
Difference of contract price and the lowest
bidding price
(Yuan/kWh)
Lowest bidding price
(Yuan/kWh)
Highest bidding price
(Yuan/kWh)
2003Rudong Phase I
100 100 2,180 0.6374 0.4365 -0.2009 0 0.4365 0.7191
2003 Huilai
100 100 1,990 0.5740 0.5013 -0.0727 0 0.5013 0.7179
2004Rudong Phase II
100 150 2,273 0.5425 0.5190 -0.0235 0 0.5190 0.5660
2004Huiteng
xile100 100 2,588 0.4091 0.3820 -0.0271 0 0.3820 0.4260
2004 Tongyu
100 2×200 2,309 0.5093 0.5090 -0.0003 0 0.5090 0.5096
2005 Dongtai Dafeng
200 2×200 2,126 0.5042 0.4877 -0.0165 0.0277 0.4600 0.5460
2005 Anxi
100 100 2,358 0.514 0.4616 -0.0524 0 0.4616 0.5560
2005 Jimo① 150 100 1,686 0.7261 0.6000 -0.1260 -0.126 0.7261 0.7261
2006 Bayin
200 200 2,383 0.5143 0.4656 -0.0487 0.009 0.4566 0.5550
2006Danjinghe
200 200 2,369 0.5361 0.5006 -0.0355 0 0.5006 0.6010
2006 Huiteng
liang 300 2×300 2,726 0.4803 0.4200 -0.0603 0.0142 0.4058 0.5651
Table 2 Comparison of contract prices for wind concession projects with feasibility and bidding prices
010 China Wind Power Report · 2007
35 are universities, colleges and research institutes, 23 are
turbine manufacturers and 12 are parts and accessories
manufacturers, including batteries, blades and inverters.
Among companies with a large annual production are
Jiangsu Shenzhou Wind Power Development Co. Ltd.,
Inner Mongolia Longxinbo Wind Power Equipment
Company (previously Inner Mongolia Shangdu Agricultural
& Pasturage Device Factory), Inner Mongolia Tianli
Mechnics Co. Ltd. (previously Inner Mongolia Power
Machine Factory) and Guangzhou Hongying Energy
Science and Technology Co. Ltd.
In 2006, over 30,000 turbines below 30kW capacity
were produced, an increase of 34.4% over 2005, and
among which turbines of 200W, 300W and 500W
accounted for 72.5% of the total. The average capacity per
unit was 361W. Total production was valued at about 100
million yuan and the average value was 7,000yuan/kW,
with a profit tax of about 10 million yuan.
A f te r 20 yea rs’resea rch , deve lopmen t and
manufacture there has been a great improvement in the
technical standard and production quality of off-grid wind
turbines made in China. In 2005, 5,884 off-grid wind
turbines were exported, producing foreign currency income
of 2.83 million US $ and accounting for 18% of the annual
production and 27% of the production value. The turbines
were exported to 24 countries and regions in both the
developing and developed world, including the Philippines,
Pakistan, Argentina, Britain, the US and Australia.
Present Status of Development 011
Development of Wind Turbine Manufacture in China3
012 China Wind Power Report · 2007
The introduction of the Renewable Energy Law and its
accompanying implementation regulations provided
solid legal guarantees and clear policy direction for
the development of a wind industry in China. Although
foreign manufacturers still take the major share of
the market, there has been a positive trend towards
domestic manufacture. Currently there are more than 40
manufacturers supplying the Chinese market, including
domestic owners, joint ventures and foreign companies.
Domestic manufacturers include Sinovel Windtec,
Goldwind and Dongfeng Eletrical Machinery. Joint ventures
include Nantong CASC Wanyuan Wind Acciona Wind
Turbine Manufacture, REpower North, Nordex (Yinchuan)
and Hunan Hara XEMC Windpower. Foreign companies
include GE (US), Gamesa (Spain), Vestas (Denmark) and
Suzlon (India). The wind manufacturing industry in China is
booming.
3.1 Wind turbine production
Investment in the wind turbine accounts for 70% of
total investment in a project. Reducing the cost through
domestic production is a necessary pre-condition of
large-scale development. In the 1980s, China conducted
a number of scientific research projects involving grid-
connected wind power units with a rated power of 18kW,
30kW, 55kW and 200kW. However, most of these
experimental turbines had no potential to be improved
and transformed into commercial products both because
of the long research cycle required and the fact that
they could not meet the market demand for units with
larger capacity. The Chinese government has financed
two types of 200kW turbine prototypes, for example, but
600kW units became the dominant international products
before the 200kW units could be commercialised. The
current strategy is to gradually improve domestically made
turbines by adopting mature foreign technologies, in the
meantime making efforts to produce major parts and
accessories domestically. This could lower the price by
10%-20% compared to imported units. In order to improve
domestically made equipment, the National Development
& Reform Commission has organised four rounds of wind
concession tendering specifically designed to provide
market opportunities for domestic enterprises.
In 2006, the total capacity of wind turbines produced by
domestic manufacturers was about 540MW, accounting
for 41.3% of the market. This was an increase of 11% on
the previous year. Domestic manufacturers have played a
significant role in reducing wind power costs and boosting
wind development, especially with their advantage of lower
product prices.
Foreign enterprises and joint ventures together
account for 60% of the wind turbine market in China.
Technically the market is dominated by the established
international technology - adjustable pitch and variable
speed turbines. Some companies have started up
assembly in China, for example the US manufacturer
GE (Shenyang), the Danish manufacturer Vestas, the
Spanish Gamesa (Tianjin) and the Indian Suzlon (Tianjin).
The largest single unit - Vestas' 2MW turbines - were
installed in Jiangsu and Fujian for the first time in 2006. In
future there is expected to be a fall in the market share of
Figure 3 Market share of domestic and foreign wind
turbines, 2004-2006
Development of Wind Turbine Manufacture in China 013
foreign enterprises to below 50% by 2007.
In April 2005, the 1.2MW direct drive turbine developed
by the Gold Wind Company has completed its installation
and commissioning, and tests made of its power curve by
an international assessment agency. A significant step
in product development, the turbine was scheduled to be
released on the market in the first half of 2007. Under the
863 Programme of the Ministry of Science and Technology,
the Energy Department of Shenyang Industry University
has also succeeded in the development of an adjustable
pitch and variable speed double fed turbine of 1MW
capacity. This was commissioned in July 2005. In 2006,
a 1.5MW version of the same turbine was developed and
released on the market. Dongfeng Electrical Machinery and
Sinovel have both meanwhile also introduced adjustable
pitch and viable speed technology, produced large scale
turbines and operating them in wind farms. Sinovel
achieved production of 75MW of capacity in 2006, with a
turnover of over 100 units. The company is now planning to
complete production of 500 1.5MW capacity turbines and
become a substantial competitor in the wind manufacturing
industry.
In addition, foreign companies and joint ventures such
as Nantong CASC Wanyuan Wind Acciona Wind Turbine
Manufacture, Nordex (Yinchuan), Suzlon, GE and Vestas
have started batch production ofMW grade turbines during
2006 and 2007. Table 3 shows the main wind turbine
producers.
ManufacturerType
(specification)Technical source Stage
X i n j i a n g G o l d W i n d
Science & Technology Co.
Ltd.
Gold Wind 50/750
(Ø50-P750-SR)
Repower of Germany
Production licenseBatch production
Gold Wind 70/1,500
(Ø70-P1,500-DD)
Gold Wind and Vensys of
Germany joint development
Batch production abroad
Sample turbine production in
China
Gold Wind 77/1,500
(Ø77-P1,500-DD)
Gold Wind and Vensys of
Germany joint development
Batch production abroad
Sample turbine production in
China
Dongfang Steam Turbine
FD70B/1,500kW
(Ø70-P1,500-VV)
Repower of Germany
Production license
Batch production abroad
Sample turbine production in
China
FD77B/1,500
(Ø77-P1,500-VV)
Repower of Germany
Production license
Batch production abroad
Sample turbine production in
China
Sinovel Windtech Co. Ltd.
70/FL1,500
(Ø70-P1,500-VV)
Führländer of Germany
Production license
Batch production abroad
Sample turbine production in
China
77/FL1,500
(Ø77-P1,500-VV)
Führländer of Germany
Production license
Batch production abroad
Sample turbine production in
China
Table 3 Major wind turbine manufacturers
014 China Wind Power Report · 2007
Zhej iang Windey Wind
Generating Engineering
Co. Ltd.
WD49/750
(Ø49-P750-SR)
Repower of Germany
Production licenseBatch production
WD54/800
(Ø54-P800-AS)
Developed by Zhej iang
WindeySample trial production
WD77/1,500
(Ø77-P1,500-VV)
Developed by Zhej iang
WindeyDesign
Baoding Huide Wind
Power Energy
Engineering Co. Ltd.
(state-owned)
55/FL1,000
(Ø55-P1,000-SR)
Führländer of Germany
Production license
Batch production abroad
Sample turbine production in
China
Beijing Beizhong Steam
Turbine Generator Co. Ltd.
(state-owned)
80/D8-2,000-80
(Ø80-P2,000-VV)
EU Group DeWind of Great
Britain
Production license
Batch production abroad
Sample turbine production in
China
Shanghai Electric Group
Wind Power Equipments
Co. Ltd. (state-owned)
SEC64-1,250
(Ø64-1,250-VV)
B r i t i s h E U G r o u p w i t h
DeWind
Production license
Batch production abroad
Sample trial production
SEC82-2,000kW
(Ø82-2,000-VV)
Shanghai Electric Group and
Aerodyn Design Company
Jointly development
Design
Nordex (Yinchuan)S70/1,500kW
(Ø70-P1,500-VV)
Nordex of Germany
Production license
Batch production abroad
Sample trial production
Guangdong Mingyang
Wind Technology Co. Ltd.
(private owned)
83/MY1.5se
(Ø83-P1,500-VV)
Mingyang and Germany
Aerodyn
Joint development
Sample trial production
Hunan Hara XEMC Wind
Power Co. , L td . ( jo in t
venture)
Z72-2,000kW
(Ø72-2,000-DD)
Harakosan of Japan has the
technology from Lagerway
of the Netherlands
Joint development wi th
Hunan Hara XEMC
Batch production abroad
Sample trial production
Nantong CASC Wanyuan
W i n d A c c i o n a W i n d
Turbine Manufacture Co.
Ltd (joint venture)
AW77/1,500
(Ø77-P1,500-VV)
A c c i o n a o f S p a i n a n d
Wanyuan
Joint venture
Batch production
REpower North
Variable pitch and
variable speed
(2,000kW/82m)
Repower (Germany)Sample turbine production in
China
Development of Wind Turbine Manufacture in China 015
In summary, China's wind industry has already
mastered the manufacturing technologies of MW capacity
wind turbines and started preliminary batch production.
There is also ongoing improvement in the quality of the
main parts and accessory production. China is now one
of only a few countries capable of mass production of
wind turbines, becoming more competitive. 39 of 1-2MW
wind turbines are installed and running. Although they
still need to be tested for operation in exposed conditions
so as to discover any problems and make improvement,
there are several Chinese businesses with the capability
to produce this size of machine, the three major ones of
which are Goldwind, Dongfang Steam Turbine and Sinover
Windtech. This provides a strong basis for the large scale
development of wind power. As the production capacity
of both domestic and foreign manufacturers continues to
increase, and with more than 20 enterprises investing in
R&D, it is expected that there will be a major increase in
wind turbine production and capacity, and the gap between
supply and demand will be solved.
3.2 Components and accessory production
Parts and accessory companies in China have developed
the key components required by domestic wind turbine
manufacturers (see Table 4)①.
Blades:
China has mastered the technology of blade manufacturing
and is able to mass produce blades for turbines up to
1.5MW capacity. Manufacturers include Huiteng Windpower
Equipment, Zhongfu Lianzhong and Shanghai FRP
Research Institute. LM of Denmark, the internationally
renowned blade manufacturer, set up a factory in Tianjin
① Information from enterprises.
Vestas
Variable pitch and
variable speed
(2,000kW/80m/90m)
Vestas
Batch production abroad
Sample turbine production in
China
Gamesa Wind Power
G52-850kW
(Ø52-P850-VV)Gamesa of Spain
Batch production abroad
Sample turbine production in
China
G58-850KW
(Ø58-P850-VV)Gamesa of Spain
Batch production abroad
Sample turbine production in
China
GE Energy (Shenyang)
Variable pitch and
variable speed
(1,500kW/70m/77m)
GE of US
Batch production abroad
Sample turbine production in
China
Suzlon Energy (Tianjin)
Co. Ltd. (Soleproprietor-
ship corporation of India)
S64/1,250kW
(Ø64-1,250-VF)Suzlon of India Batch production
Turbine specifications: Ø = rotor diameter; P = rated power; AS = active stall; DD = direct drive; SR = stall regulation;
VV = variable pitch and speed; VF = variable pitch and constant speed.
016 China Wind Power Report · 2007
No. Component Name of enterprise Technical resource Stage
1
Gearbox
Nanjing High-speed & Accurate Gear Group Co. Ltd
Own research & development Batch production
2 Chongqing Gearbox Co. Ltd Own research & development Batch production
3Hangzhou Advance Gearbox Group Co. Ltd
Own research & development Batch production
4
Generator
Lanzhou Electric Corporation Own research & development Batch production
5Haerbin Hadian Wind Power Equipment Co. Ltd
Own research & development Batch production
6Beiche Group Yongji Electric Motor Factory
Own research & development Batch production
7S h a n g h a i E l e c t r i c G r o u p Shanghai Electric Motor Co., Ltd
Own research & developmentTrial production: batch production started in the first quarter of 2007
8Shangxi Fengxi Heavy Industry Co. Ltd
Own research & development (1.5MW)T e c h n o l o g y i n t r o d u c e d (transferred from Germany for 2MW by license)
D e s i g n p h a s e , t r i a l p roduct ion in March 2007
9
Blades
Shanghai FRP Research Institute J o i n t d e s i g n ( G e r m a n y Company)
Batch production
10C h i n a C o m p o s i t e s G r o u p Corporation Ltd
Technology transfer (purchase the technology from NOI)
Batch production
11LM Glasfiber (Tianjin) Co. Ltd Sole foreign proprietorship
Own research & developmentBatch production
12ZhongHang (Baoding) Huiteng Windpower Equipment Co. Ltd
Own research & development Batch production
13
E l e c t r i c a l control
Be i j i ng Corona Sc ience & Technology Co. Ltd(Institute of Electrical Engineering Chinese Academy of Sciences)
Own research & development Trial production
14 Hefei Sunlight Power Co. LtdOwn research & development (joint development with Hefei Industry University)
Trial production Batch production will start in 2008
15Nanjing Automation Research Institute (Nanrui Group)
Own research & development Trial production
Table 4 Main component manufacturers in China
Development of Wind Turbine Manufacture in China 017
in 2002. Vestas, Gamesa and Suzlon also have their own
blade manufacturers in China. Others are carrying out
research into blades, including Huayi (Baoding), Tianjin
Dongqi and Beijing FRP Research Institute.
Gearboxes:
Major gearbox manufacturers include Chongqing Gearbox,
Nanjing High-speed & Accurate Gear Group and
Hangzhou Advance Gearbox Group. The latest companies
to enter the market are Dalian Heavy Industry and Sichuan
Erzhong.
Generators:
There are more generator than gearbox manufacturers.
These include Lanzhou Electric Corporation, Yongji
Electric Motor Company, Shanghai Electronics, Dalian
Tianyuan, Dongfeng Electric Motor, Nanyang Electronics
and Zhuzhou Time Group Company.
Bearings:
For the main bear ings China is a lmost ent i re ly
dependent on imports. SKF and FAG are the major
manufacturers. Xuzhou Rothe Erde produces yaw and
variable pitch bearings. Wangfangdian Bearings and
Luoyang Bearings have production capacity for variable
pitch bearings.
Electrical control:
This is the weakest sector in domestic accessory
production and is entirely imported. Enterprises currently
in the research process include the Institute of Electrical
Engineering Chinese Academy of Sciences, Hefei Sunlight,
Xuji Electric Company and Nanjing Automatic Research
Institute. There are also other companies and research
institutes doing research into electrical control systems for
MW capacity variable speed and permanent frequency
turbines.
Other parts manufacturers include FAW Jiefang
Automotive Co. Ltd. Wuxi Diesel Engine Works (Wuxi,
Jiangsu, hub and gearbox body casting), Dongfang Steam
Turbine Factory (Deyang and Sichuan, hub and gearbox
body casting), Qinchuan Machine Tool (Baoji and Shaanxi,
hub and gearbox body casting), Wuxiao Group (Tsingdao,
towers), Wuxi Dachang (Wuxi, towers), Tianshun (Suzhou,
towers) and Shanghai Taisheng (towers).
Currently, domestically made components could meet
90% of the demand for 600kW and 750kW models, whilst
the output for 1.5MW units exceeds 70%. However, with the
expansion of wind power development there is still a lack
of capacity in parts and accessory production, especially
blades and gearboxes. Present production capacity of blades
can meet an annual demand of about 1,500-1,700MW.
For gearboxes, production capacity is about 1,600 units,
which represents about 2,000MW. Compared to the growing
demand for up to 4,000MW of capacity, there is still a gap of
2,000MW. In addition, most of the bearings for wind turbines
are still reliant on imports. SKF and FAG, the two major
No. Component Name of enterprise Technical resource Stage
16
Tower
Shangha i Ta isheng Power Engineering Machinery Co. Ltd
Technology introduction (learn and s imu la te process ing according to the design)
Batch production
17 Qingdao Wuxiao Pipe Co. LtdTechno logy i n t r oduc t i on (design provided by client)
Batch production
18South Ch ina P ipe Indust ry Company (Guangzhou)
Joint design with GoldWind
Batch production
018 China Wind Power Report · 2007
bearings producers have supplied as much as they can to
China but they still could not meet the demands of gearbox
production. In terms of electrical control systems, China
has little experience and many enterprises are still doing
research on the road to producing mature products. Lack of
production capacity of key components is an issue to which
attention needs to be paid.
3.3 Profiles of major wind power companies
Gold Wind Science and Technology Co. Ltd.
Xinjiang Gold Wind Science and Technology Co. Ltd. was
founded in 1998 with a registration capital of 32 million
RMB. The business includes: production and sale of large
wind turbines; technology transfer and the application
of wind turbine technology; manufacture and sale of
wind turbine components; technical consultancy in the
manufacture of wind turbines and operation of wind farms;
construction and operation of pilot wind farms.
The company has been dedicated to organisational
improvement , technica l innovat ion and creat ive
management since first establishing the R&D work
on 600kW wind turbines, one of the key scientific and
technological achievements during China's ninth five year
national development programme. The company also
completed R&D for a 750kW wind turbine during the tenth
five year programme and later for a pioneering 1.2MW
direct drive turbine.
The main products of the company include 600kW,
750kW, 800kW and 1.5MW direct drive wind turbines.
More recently, 2MW and 2.5MW turbines have been under
development, aiming at future offshore applications. The
company has built three factories in Hebei, Zhejiang and
Guangdong, and two production bases in Beijing and
Baotou, establishing a production capacity for thousands
of wind turbines per year.
By the end of 2006, the installed capacity of wind
turbines produced by Gold Wind was 667MW, representing
83.4% of the domestic market, and 25.7% of the
cumulative installed capacity in China. In 2006, Gold Wind
achieved tenth position among global manufacturers of
wind turbines.
Sinovel Wind Co. Ltd.
Sinovel Wind Co. Ltd. specialises in R&D, design,
manufacture and sale of wind turbines. The company is
financed by Dalian Heavey Industry-Dalian CraneWork
Group Co. Ltd with the aim of industrial restructuring by
entering the wind market. It has set up headquarters in
Beijing and a production factory in Dalian with a total area
of 30,000m2. Sinovel is the first company to transferMW
capacity technology by importing the complete system
of the German Führlander FL1,500 turbines. The
company developed and updated the technology, and
also completed the production chain for manufacturing
FL1,500 turbines. 85.7% of the components can be made
locally. The production capacity is now 300 units per year,
with a plan to increase to 1,000 units by the end of 2010.
The company is also undertaking R&D on 2MW, 3MW
and 5MW turbines, to be used both inland and offshore.
In 2006, Sinovel was the second manufacturer in China in
terms of installations. It is estimated that the company's
sales will reach 750MW in 2007, covering 40% of the
domestic production.
Dongfang Steam Turbine Factory
Dongfang Steam Turbine Co. Ltd., part of the China
Dongfang Steam Electric Group Co. Ltd., was created
from the restructuring of the former Dongfang Steam
Turbine Factory in December 2006. The latter was a
Development of Wind Turbine Manufacture in China 019
large state-owned company engaged in R&D, design
and manufacture of power generation equipment. In 2004
the company imported the advanced technology and
production permits for the 1.5MW MD70/77 wind turbines
produced by German company REpower. Developing
on this technology, the company is now able to provide
services from wind farm design through to after-sales
service. Nowadays, 70% of the 1.5MW wind turbine’s
components can be made locally. The annual production
capacity of this company is 300 units, with a target for over
500 units from 2008.
Based on the knowledge gained in designing,
manufacturing and servicing the 1.5MW model, the
company is now cooperating with established wind turbine
design companies in Europe to develop 2.5MW turbines
with its own patent. The company has also established
a blade factory and a wind power technology research
institute. In 2005, the largest 1.5MW wind turbines
produced by the Dongfang Company were installed in
Rongcheng, Shandong. In 2006, the self-developed
duplicate feeder asynchronous wind turbines aimed at low
temperature operation were installed in Hulunbeier, Inner
Mongolia, indicating the mass production of high capacity
wind turbines.
China Wind Power Report · 2007 020
Prices for Wind Power Generation4
Prices for Wind Power Generation 021
4.1 History of wind power pricing systems
China has gone through four stages in its pricing system
for wind power generation.
Free competition stage
In the first stage, from 1990 to 1998, the price paid for
electricity from wind power was very low because the
equipment was purchased using foreign grants and the
income only had to cover the maintenance of the wind
farms. For the Dabancheng wind farm, for example, built
in the early 1990s, for example, the price was less than
0.3Yuan/kWh. This was almost the same as that for
thermal power stations.
Government approved prices
The price for wind powered electricity varied between 1998
and 2003. The price was approved by local government,
which then reported it to central government. During this
period, various prices were adopted. The lowest was the
same as for thermal power. This was the case for Zhangbei
wind farm, built by the China Energy Conservation
Investment Company, for example. The highest price,
on the other hand, could be more than 1Yuan/kWh. The
Kuocangshan wind farm in Zhengjiang, for example,
received 1.2Yuan/kWh.
Tender prices or approved prices
From 2003 to 2005 there were two ways in which the price
for wind power was decided, either through a bidding or
taken as an approved price. This stage started as the first
batch of wind concession projects was organized. By the
end of 2006, the government organized four batches of
wind concession projects. The projects for 2007 are still
under consideration. At a local level, the price was still
determined by the local government.
Bidding price plus approved price
After 2006, China introduced a fourth system for setting the
price of wind power, coinciding with the inauguration of the
Renewable Energy Law and its implementation regulations.
This states that “the price for wind power should be
determined through tender”. This means that the price
022 China Wind Power Report · 2007
is determined through a tender and then approved by the
government.
Figure 4 shows the electricity price for some wind
projects at the end of 2006, reflecting the variations in
the price in the past years. The prices approved by the
government are similar to those in foreign countries,
indicating that the price (except for some projects) for non-
concession projects is reasonable. The difference in the
price also reflects the difference in wind resource between
different areas. In some cases, however, pricing systems
and policies interfere with fairness. A price difference
implemented because of varying wind resources is
acceptable, but becomes controversial when brought
about by government policies. In some cases the result
is that different prices have been adopted in the same
geographical location. For example, for three wind farms
built at the same time the price ranges from 0.74Yuan/
kWh down to 0.46Yuan/kWh. The gap between the
highest and lowest price is 0.28Yuan/kWh, which cannot
be considered fair.
4.2 Current pricing policy for wind power
On 1 January 2006 the Renewable Energy Law became
effective, providing a legislative framework for developing
renewable energy. The law states that “the grid power
price of renewable energy power generation projects
shall be determined by the pricing authorities of the State
Council on the basis of being beneficial to the development
and utilisation of renewable energy and being economic
and reasonable”. Three days later the NDRC issued
“Temporary Implementation Rules for Establishing a
Feed-in Tariff for Renewable Energy Power and the
Figure 4 Average electricity price for current wind power projects at the end of 2006 (yuan/kW.h,tax not includled)
Prices for Wind Power Generation 023
Sharing of Expenses in Purchasing Electricity from
Renewable Energy”, encompassing the principle that
“the wind power price should follow the government
determined price. This price should be approved by the
relevant department of the State Council based on the
price of the tender”.
This pricing policy for wind power is based on the fact
that China has now obtained some experience through
national wind concession projects. The tendering system
is aiming at finding the proper price standard, but it is not
necessarily for every project. The implementations could
be as the follows. Prices are determined by means of
tender for wind projects. After a while, the government then
decides the local price based on the result of the tenders.
Because of the limited number of the tenders, however, the
price cannot reflect the accurate cost and profit of a wind
project. But as the number is growing, the price is close
to reasonable. At that time, it is wise to use the tendering
price as local standard.
Apart from that, the regulations also state that
“the price for wind power should be confirmed by the
government after 2006 and the excess between the price
for wind power and the price for thermal power should be
compensated for by adding an additional charge to the
selling price of electricity to all electricity consumers”.
Since 30 June 2006 an additional 0.001Yuan/kWh
has been charged to electricity consumers in order
to compensate for the additional cost of renewable
electricity.
4.3 Effects of wind power pricing policy
1. The implementation of pricing policies
has encouraged a booming wind market
The government's pricing systems and other supporting
policies have accelerated growth of the wind power market
in China. By the end of 2005 a total of 1,864 wind turbines
had been installed, with a combined capacity of 1.265GW.
During 2006 a further 1,454 turbines were installed, with
a capacity of 1.33GW, increasing the cumulative capacity
by more than 100%. This total has pushed China up to
number 6 in the international wind market.
However, of the capacity newly installed in 2006, only
328.6MW was approved in that year. The remaining 1GW
was approved before 2005. According to government
regulations, those projects cannot be compensated
through the renewable energy fund. In order to promote
wind power, the government should consider enlarging the
subsidy system to include projects approved before 2005
and implemented in 2006.
2. There is a wide variation in prices paid
through tenders ①
After the implementation of the wind pricing polices, some
local government authorities also made plans for wind
projects outside the 4th national wind concession projects.
The result is that the price paid varies between projects
being built in the same place. Sometimes the price is too
low, sometimes too high. For example, the prices resulting
from the 4th round national wind concession project are
0.4058, 0.4566, 0.4656 and 0.5006Yuan/kWh respectively.
The price for wind projects lower than 50MW initiated
by local governments, on the other hand, is more than
0.50Yuan/kWh, and mostly 0.55-0.65Yuan/kWh. In a few
cases it is as high as 0.8Yuan/kWh. Generally speaking,
the price gap between national concession projects and
projects initiated by local government is about 0.1Yuan/
kWh. According to some experts, this gap is far wider
than that justified by the difference in size of projects.
Furthermore, these prices must be verified by the pricing
bureau within NDRC before the projects can receive their
①Li Junfeng, et.al. Study of Wind Power Price Formulation in China. 2006.
024 China Wind Power Report · 2007
subsidy from the renewable energy fund.
3. Unclear pricing policies impact on foreign
and private investment
Since the price is determined on a project by project basis,
both foreign and private investors are not sure about the
investment signal being given and are reluctant to invest in
wind power. After the implementation of the recent pricing
policies, no foreign or private companies won concession
projects, which makes them to doubt the Chinese system.
At present, in both the national wind concession projects
and projects initiated by local government, the developers
are all state-owned companies.
4. Latest progress on wind power pricing
policy
There has been some progress on wind power pricing
policy during 2007. In June 2007, the NDRC verified and
approved 23 wind projects in Hebei, Inner Mongolia, Jilin,
Gansu, Xinjiang and Fujian. The prices ranged from 0.51
to 0.61Yuan/kWh. During the verification process, some
prices were slightly adjusted, although they still basically
reflected the local wind resources. In Jilin, the verified price
was exactly the same as the contracted price, 0.61Yuan/
kWh. The same was true in other provinces (see Table 5).
4.4 Trend of wind power pricing policy
The new pricing policies for wind power have been in
operation for a year, resulting in some successes but also
some problems. Although the policies have been improved
during their implementation, some of the regulations still
need adjusting. These are the most important questions:
1. How should the price be determined
through tenders?
As mentioned above, the government aims to determine
the price for wind power in different regions through a
number of tenders. However, how many tender projects
are enough to determine the price for a particular region? If
the prices in tenders vary widely, how should this be dealt
with? There are no existing answers to these questions,
but the problems need to be dealt with through practical
experience. At present, there are more than 40 wind tender
projects nationwide, of which 23 have been submitted to
the NDRC for approval. Although the approved price for
each region is almost the same, this is not the confirmed
price for this region. The price is only for a particular
project, not for the province. But the results of the tenders,
the approved price and the price verifying method have
established the basis for determining the price for the
region in the future.
Province Installed capacity /MW Price (Yuan/kWh)
Hebei (7 projects) 300 0.54-0.61
Inner Mongolia (8 projects) 350 0.51-0.54
Jilin (6 projects) 300 0.61
Gansu (4 projects) 110 0.54
Xinjiang (1 project) 30 0.51
Fujian (1 project) 30 0.585
Table 5 Approved price for some non-concession wind projects in 2007
Prices for Wind Power Generation 025
2. How can an attractive price level be
ensured?
The four national wind concession projects have give
some idea of the price level of wind power in China, while
it is time now to move to the feed-in-tariff system. One
method would be to divide the nation into three regions -
areas with a rich wind resource (more than 2,500 hours at
full operation per year), those with a good wind resource
(between 2,000 and 2,500 hours) and those with an
ordinary wind resource (below 2,000 hours). Relevant
prices should be set for the three regions using the
following approach.
For tenders in Jiangsu, Guangdong and Jilin provinces
we could take the price for coastal regions, using the
average price of the contracted prices, excluding the
highest and lowest figure. This would give a reference
price of about 0.6Yuan/kWh. For tenders in Inner Mongolia,
Hebei and Xinjiang provinces we could take the price for
the regions with a rich wind resource. This would give a
reference price of about 0.5Yuan/kWh. For other regions,
we could adopt a maximum price, for example no more
than 0.65Yuan/kWh.
3. How should the price be adjusted?
The wind power industry is developing very fast and the
cost of manufacture is decreasing. We should therefore
reduce the electricity price according to the falling cost of
manufacture. In order to protect the industry, however, we
should set a minimum price. At the moment, we should
consider setting the minimum price at 0.5Yuan/kWh up
to 2020. This would protect the interests of investors,
developers and manufacturers.
026 China Wind Power Report · 2007
Wind Power Concession Projects5
Wind Power Concession Projects 027
Wind power projects with an installed capacity of or above
50MW are approved by the national government and can
go through the concession bidding process. Projects with
an installed capacity below 50MW are approved by the
relevant provincial government agencies. In that case,
there is no regulation or policy requiring projects to go
through the concession bidding process.
5.1 Concession bidding and evaluation procedure for wind power
Concession project bidding is organized by the NDRC.
The Commission is responsible for the initial evaluation of
projects submitted by local authorities, for deciding which
bidding projects are successful and for granting project
approval.
The practical bidding work is carried out by the
Zhongshe International Bidding Co. Ltd. and the China
Hydro Power Project Consulting Group. These two
companies write the bidding documents and publish the
bidding invitation letter in major domestic and international
newspapers and on the internet. According to the bidding
documents, the relevant provincial DRC and the bidding
company organize an on site inspection and hold a pre-
bidding meeting. Each bidding project must open its bids at
an agreed time in Beijing.
The organization and procedures for the project bidding
evaluation runs as follows:
Organization of the evaluation
The director of the evaluation committee comes from the
Division of Renewable Energy and Rural Electrification
of NDRC. The members are from provincial DRCs, the
State Grid Company, provincial power companies, bidding
agencies and technical experts.
Within the evaluation committee there is a Business
Group and a Technical Group.
The Business Group is responsible for initial evaluation,
evaluation of the concession agreement with notes,
supporting the Technical Group in finishing the evaluation,
ranking and clarification and collecting relevant documents
and finishing the report.
The Technical Group is responsible for delivering
detailed evaluation of the bidding documents (technical
plan, financing plan, financing proposal and experience),
evaluation of the electricity purchase contract with notes
and completing the ranking, clarifying and evaluation report
with the Business Group.
The evaluation procedure
a) Initial evaluation: The Business and Technical Groups
decide whether the proposals respond to the bidding
requirements and whether there are mistakes or reservations.
The Business Group will finish the initial evaluation report
on the noted concession agreement and submit it to the
evaluation committee. The Technical Group will evaluate the
technical plan and noted electricity purchase contract and
submit them to the evaluation committee.
b) Detailed evaluation: The Technical Group evaluates
the technical plan, financial plan, financing proposal,
experience etc. to decide whether they meet the
requirements. It will finish the evaluation on the noted
concession agreement and electricity purchase contract
and determine the list of candidates.
c) Ranking of candidates: The evaluation committee
ranks the candidates based on the detailed evaluation
report. The companies ranked second and third are
recommended as candidates for negotiation.
d) Clarification: In order to evaluate and compare the
proposals, the bidders might be requested to give written
clarification on unclear statements in their proposals.
However, requests, proposals, permission or acceptance
028 China Wind Power Report · 2007
of a change related to the price or other important contents
are not acceptable. All clarification requests must be
issued and collected in writing. They need signatures from
both parties and can form part of the eventual contract with
legal force.
e) Negotiation: The evaluation committee negotiates with
the candidates on the bidding documents and suggestions
or modifications according to the bidding requirements. The
negotiation begins with the candidate who has the highest
ranking and continues until the committee is satisfied.
Negotiation involves both price terms as well as any other
non-price items.
After negotiation, the committee decides the winning
bidder and reports the results, with the evaluation report, to
the NDRC.
5.2 Outline of the concession bidding procedure for wind power
The first concession round projects were for Rudong wind
farm (100MW) in Jiangsu province and Huilai Shibeishan
wind farm (100MW) in Guangdong province.
On 1 September 2003, the first wind concession bidding
process opened in Beijing. Huarui Company won the
bidding for Rudong wind farm with a price of 0.4365Yuan/
kWh. Guangdong Yuedian Group won the bidding for
Shibeishan wind farm with a price of 0.513Yuan/kWh (see
Figure 5).
Figure 5 First round of wind power concession projects
The prices in Figure 5 include value added tax (VAT).
Some adjustment are made to turn orgianal prices (without
VAT) into real ones (with VAT).
The second round of concession projects was for
the second phase of Rudong wind farm (100MW) in
Jiangsu province, Huitengxile (100MW) in Inner Mongolia,
Shibeishan wind farm (100MW) in Guangdong province
and Tongyu Unity wind farm (100MW) in Jilin province.
On 1 September 2004, the second round of wind power
concession projects bidding opened in Beijing. The results
are shown in Figure 6.
Wind Power Concession Projects 029
Figure 6 Second round of wind power concession projects
Note 1: Beijing International Power New Energy Co.
Ltd .and its partners won the bid for Huitengxile wind farm
in Inner Mongolia. Because the area near the wind farm
also has a rich wind power resource, NDRC decided that a
wind farm of the same scale, conditions and bidding price
could be built if other bidders agree. China Huadian Co.
Ltd. agreed to build another 100MW wind farm nearby after
negotiation.
Note 2: Longyuan Power Group with its partners and
Hua'neng New Energy Environmental Protection Industry
Co. Ltd. won Yutong Unity wind farm in Jilin province with
a bidding price of 0.5090Yuan/kWh. Because the scale
of the development area was enough to justify 400MW
of capacity, both sides agreed to develop an additional
200MW wind farm with the same bidding price.
Note 3: Longyuan Power Group with its partners won the
bid for the second phase of the Rudong wind farm project
in Jiangsu province with a price of 0.5190Yuan/kWh. The
development scale was adjusted upwards to 150MW.
The third round of concession projects covered Dongtai
wind farm (200MW) in Jiangsu, Anxi wind farm (100MW) in
Ganxu province and Jimo Wangcun wind farm (150MW) in
Shandong province.
On 16 August 2005 bidding for the third round of wind
power concession projects opened in Beijing. The bidding
results are shown in Figure 7.
Note 1: Guohua Energy Investment Company won
the bid for Dongtai wind farm in Jiangsu province with a
bidding price of 0.4877Yuan/kWh. China Power Investment
Group agreed to develop an additional 200MW project in
the nearby Dafeng county after negotiation.
Note 2: Huadian International Co. Ltd. was the only
bidder for the Jimo Wangcun wind farm in Shandong
province, with a bidding price of 0.7261Yuan/kWh. Due
to the concentration of farmland in the project site, the
installed capacity was limited. The project was therefore
adjusted to 100MW with a bidding price of 0.60Yuan/kWh
approved by the NDRC.
030 China Wind Power Report · 2007
Figure 7 Third round of wind power concession projects
The fourth round of concession projects covered
Huitengliang wind farm (300MW) in Inner Mongolia, Baotou
Bayin wind farm (200MW) in Inner Mongolia and Zhangbei
Shanjinghe wind farm (200MW) in Hebei province.
There were 17 bidders in the fourth round, all of
them state-owned companies. Five of the companies
established joint bidding bodies with companies registered
abroad in order to benefit from preferential policies for
foreign companies. There was also a major adjustment to
the evaluation procedure and a requirement for increased
localisation of equipment. This further reduced the range of
prices in the bidding.
The bidding prices for Huitengliang wind farm (300MW)
in Inner Mongolia ranged from 0.4058Yuan/kWh to
0.5651Yuan/kWh, with an average of 0.4788Yuan/kWh.
The bidding prices for Baotou wind farm (200MW)
in Inner Mongolia ranged from 0.4566Yuan/kWh to
0.5550Yuan/kWh, with an average of 0.5041Yuan/kWh.
The bidding prices for Zhangbei Shanjinghe wind farm
(200MW) in Hebei province ranged from 0.5006Yuan/
kWh to 0.6010Yuan/kWh, with an average of 0.5281Yuan/
kWh. These prices generally reflected the construction
conditions for each project and an expected income
mostly meeting the standard investment return for the
industry.
Due to the requirement for an agreement between
investors and manufacturers in the bidding process, 12
turbine manufacturers joined the fourth round. There was
one foreign owned company, three Chinese and foreign
joint ventures, one private company, two stock companies
and five state-owned companies. Altogether 20 types of
wind turbine were involved in the bidding. Blade diameters
ranged from 49m to 83m and the rated power from
750kW to 2,000kW. Six of the turbines were domestically
produced. The bidders had all signed contracts with
major equipment suppliers and made plans for the 70%
localisation requirement.
In August 2006, the fourth round of wind power
concession project bidding opened in Beijing, with the
results shown in Figure 8.
Wind Power Concession Projects 031
Figure 8 Fourth round of wind power concession projects
032 China Wind Power Report · 2007
Note 1: The bidding consortium of Zhongguang
Nuclear Development Co. Ltd. and Zhongguang Nuclear
International Co. Ltd., together with Beifang United Power
Co. Ltd. won the bid for Huitengliang wind farm project in
Inner Mongolia with a bidding price of 0.4056Yuan/kWh.
Each partner can develop a 300MW wind farm.
Note 2: In the Bayin project, Jie'neng Investment
company had the lowest bidding price, but Longyuan
Power won the bid with the advantage of a high level of
localisation of wind turbine supply, even though the bidding
price was slightly higher.
The fifth round of concession projects covered Beiqinghe
wind farm (300MW) near Tongliang in Inner Mongolia,
Wulanyiligeng wind farm (300MW) near Bayanzhuoer in
Inner Mongolia, Weichang Yudaokou wind farm (150MW)
near Chengde in Hebei province and Changma wind farm
( 200MW) near Yumen in Gansu province.
In April 2007, the evaluation meeting for the feasibility
study reports of the four projects was held. In May, the
evaluation findings were reported to the NDRC. At the
end of August, the opening meeting of the fifth round
of wind power concession projects was held and the
bidding documents submitted. There were relatively major
adjustments to the conditions of the bidding, based on
previous experience, and these are expected to have a
positive influence on the prices eventually agreed.
5.3 Analysis of the results and impacts of concession project bidding
1. The role of concession projects in
improving the acceptance of wind power to
the national grid
Four rounds of wind farm concession projects from
2003 to 2006 have been important steps in the context
of Chinese power sector reform, which has resulted in
the separation of power generating companies from the
supply utilities. This reform process exempts wind power
from market competition by offering a fixed price and a
long-term contract. The utilities invest in the construction
of transmission lines and transformers from wind farms
to the grid. The monopoly over wind power by the former
Ministry of Power has been broken, helping to draw in
investors from both home and abroad and encourage
competition. Requirements for the extent of localisation
in turbine manufacture have been set. When there was
no fixed price for wind power and the local government
authorities and utilities were not supportive of wind
farm development, the concession projects organised
by central government have played a significant role in
promoting acceptance of large scale wind power to the
grid.
2. The impact of concession projects on
wind power development in China
A. The bidding system has resulted in very low wind power
price
The negative impact of the first and second rounds of
concession projects was caused by the promise of the
former National Planning Commission that the bidders
proposing the lowest price would win the bids. As a result,
the bidding price was lower than reasonable to make
the project effective. The most notable example was
the bidding in consecutive years for the Rudong wind
farm. The wind resources and other conditions were the
same, but the bidding price by the Huarui company was
0.3979Yuan/kWh in 2003 and 0.56Yuan/kWh in 2004. The
price rose 40% within one year.
Even though the third and fourth rounds took non-price
criteria into consideration, in almost all cases the company
Wind Power Concession Projects 033
with the lowest bidding price won the bid. This suggests
that despite the fact that other factors were considered, the
bidding price was still the determining factor.
In order to reduce the bidding price, bidders have either
over-estimated the wind resource and expected electricity
generation or underestimated the cost of the wind turbines
and maintenance. Some of the bidders have established
joint ventures with companies registered abroad, a method
by which they can avoid VAT and reduce income tax. This
is being used as a means of unfair competition, and will
mean a rise in normal tax for the country.
B. Bidding is not conducive to the development of multi-
investment sources for wind power
Ultra low bidding price can also be seen as an indication
that wind power companies are enthusiastic about
investing in the technology. This competition is welcomed
by the government. However, careful analysis suggests
that the wining bidders only intend to win the concession
projects in order to enter the wind power field for its future
prospects. Their purpose is to occupy good resources for
the future, instead of considering the investment return on
their current projects. Under this unreasonable investment
drive, some privately owned companies ventured into the
price competition in the first few rounds. Some of them
were even successful. However, in the latest round of
bidding all the private companies retreated due to the high
investment risk. Foreign companies also decided to wait
and see. In the fourth round, all the bidders were large
state-owned energy groups.
Why do the state-owned companies have the ability
to shoulder this price cutting? In practice, most of them
belong to large national and local energy groups with some
kind of monopoly and strong financial backing supported
by profitable coal fired or hydro power stations. They are
therefore able to shoulder a small profit or even a loss
from several hundreds of MW of wind power projects. In
other words, the state-owned companies can afford to
lose money at present, so long as they can control the
resources and make profits in five or even ten years.
Meanwhile, investing in wind power will win their company
a good image for developing clean energy. For private
companies, on the other hand, the risk is big enough to
keep them out.
Another reason why the state-owned companies
are willing to bid low prices for wind power may have
something to do with the binding quota policy for renewable
energy currently under discussion. In order to increase
investment in renewable energy, the central government
has been considering setting a minimum percentage share
of renewable energy within the generation output of large
power companies. This has made the companies willing
to bid for wind power projects with low prices in order to
achieve their renewable energy quota.
This quota policy was originally designed to encourage
large state-owned power companies to invest more in
renewable energy at a time when investment in renewables
was generally limited. Since the Renewable Energy
Law was passed, however, and the key issues about
grid connection, tariff and cost distribution were solved,
investment in renewable energies such as wind and solar
power has soared. Competition between private and state-
owned companies has become fierce, an unexpected
situation making the quota policy less relevant. Meanwhile,
it has been used as an excuse for the big five power
groups to compete with low prices for wind power projects.
It is safe to say, nonetheless, that the large state-
owned power companies and the big five power groups
in particular will invest in wind power to investment
in renewables even without the government's quota
policy. The problem is how to build a suitable system to
attract investment from a range of sources. Meanwhile,
a reasonable competition mechanism and optimised
034 China Wind Power Report · 2007
regulations need to be introduced to ensure the long-term
healthy development of wind power.
However, with the unwritten rule that the lowest bidding
price wins the bid and the participation of multiple investors,
the winning bidding price is so low that a reasonable profit
cannot be guaranteed. This has become an investment
barrier for both private and foreign companies. It is far
removed from the original intention of attracting multiple
sources of investment and avoiding a cartel situation in
power industry.
In addition, a bidding price lower than a reasonable level
makes it harder for the investor to make profits, thus not
generating any income tax. The project cannot therefore
promote the development of the local economy. This in
turn will seriously lessen the enthusiasm of poorer regions
to develop wind power.
C. A lower than reasonable wind power tariff will ultimately
destroy the newly developed wind turbine manufacturing
industry in China
Apart from marginalising serious investors, the other major
problem of a lower than reasonable grid tariff for wind
power is that it will shift the pressure on costs to the wind
turbine manufacturers. The turbine manufacturing industry
is still in its early stage of development in China. Although
China has rich wind resources and a large potential
wind power market, large scale development of the
manufacturing industry still relies on foreign technologies
and products, including building wind turbines through joint
ventures, obtaining the technology through a permit or
even importing complete turbines. This is why the fourth
round of concession projects introduced a regulation
binding the bidding to Chinese production in order to
protect domestic manufacturers.
Even so, if nothing is changed, the bidding will ultimately
return to a price war, as seen in the first four rounds of
concession projects. The abilities of developers to build
wind farm projects are at basically the same starting
point, and the price war will ultimately be reflected by the
prices for equipment and services. After winning a wind
power project at a low price, developers will try their best
to squeeze the profits of the suppliers. It is well known
that when an industry has made no major technology
breakthrough, has no complete industrial chain and
before it is given government preferential support such
as through tax cuts, personnel training or public research
and development, it is quite exposed to risks and might die
young. The wind power equipment manufacturers currently
have no leeway to reduce the price of their equipment
or services dramatically in order to drastically reduce the
wind power price. Even though the government set a 70%
localisation rate to ensure a market share for wind power
equipment manufacturers, the wind power industry at the
manufacturing end makes little or no profits, or even loses
money. This situation will not ensure the development of
competitive high tech businesses and a mature industrial
supply chain. It will also limit the research and development
enthusiasm of the enterprises and push them into being
only concerned for their short term survival. They will have
no ability to invest in improvements to their technology.
This is contradictory to the original intention of developing
a national wind power industry and increasing the overall
installed capacity of wind power. Without opening up more
potential for profits at the lower end of the supply chain,
this vicious cycle will not change.
3. The bidding process needs to be further
modified
A. The preparatory work for wind projects needs to be
further strengthened. Some of the previous bidding
projects encountered problems due to lack of preparatory
work. In the first round, for example, the Huilai wind farm
had only one set of wind measurement data and the
Wind Power Concession Projects 035
location of the wind measurement mast was not marked on
the bidding proposal. As a result, the wind measurement
was unrealistic. At Tongyu wind farm, the winning bidder
Huaneng New Energy Company found that the actual
site was not the same as that described in the bidding
documents. The local government had not conducted a
preparatory investigation, causing uncertainty about both
the potential installed capacity and power output of the
project. There was also insufficient wind measurement or
land data for the 2005 Jimo wind farm in Shandong, and
the technical feasibility study required by the NDRC was
missing. During the construction period, the scale of the
project was reduced.
These contradictions over land use also occurred
for other projects. In the end, some projects had to be
cancelled. During implementation, the winning developers
found that many problems which should have been solved
in the preparatory period had not been dealt with, and the
developer had to start again from scratch.
B. The phase II price, the so-called “average market
price at that time”, has been estimated by bidders.
The purpose of phase II is to make sure that the price
is fixed during the period of the loan, normally 15 years.
Once the period of electricity generation has exceeded
30,000 hours, the operating cost is greatly reduced due
to the payback of the loan. At that time, the company can
operate well, even when the average market power price is
adopted. In practice, however, some bidders have reduced
their phase I bidding price by increasing their phase II
price. The difference is in a range from 0.3038Yuan/kWh
to 0.5425Yuan/kWh. If the winning price is low, however,
the operation of the company during the loan period will be
strongly affected, making it difficult to repay the investment.
C. There is a need for clear regulation over the checking
of completion of a project. In the first three rounds of
bidding, localised products is only a preliminary criteria in
the project design. After winning the bid, the developers
could therefore accept other offers of equipment. So it is
very likely that the equipment will end up being different
from the bidding plan. In the fourth round, the investors and
equipment suppliers bid jointly and provide an equipment
localisation plan. Because the regulations on the checking
of the completion of the project are not fully published,
there is no clear sanction on the investors if they cannot
meet the standard promised in the bidding.
4. Change of conditions for concession
bidding in the fifth round
The fifth concession project bidding introduced some
major adjustments to the bidding documents based on
the previous four rounds. The most important one was
a change to the evaluation plan for the bidding power
price. In the first four rounds, the bidder with the lowest
bidding price had the most advantages. In the fifth round, a
completely new power price evaluation method is used, the
formula being as follows:
: represents the bidding prices of bidders
passing the initial evaluation
: represent the highest and lowest prices of
bidders passing the initial evaluation
: represents the number of bidders passing the initial
evaluation.
036 China Wind Power Report · 2007
The weight of the bidding price is still 25% and those
bidders with the bidding price closest to the average
bidding price score the highest, but the purpose of the
new formula is to discourage some bidders from using an
unreasonably low bidding price to win the bid.
Another major adjustment relates to the specific
regulation for wind power equipment manufacturers. As
a supplier joining the bidding, one manufacturer can sign
supply contracts for a single type of wind turbine with up
to three developers. In the first four rounds, a supplier
contract had to be exclusively with one developer. This
adjustment means that developers have more choice of
turbines, making the technical plan more scientific and
reasonable.
Meanwhile, some adjustment has been made to the
bidding papers according to the changes of national
policies and relevant technical regulations and different
requirements of the bidders. At this point in time it is
difficult to evaluate the fifth round of bidding since the
results have not yet come out. However, the adjustments
are good news in terms of optimising the wind power grid-
connected pricing mechanism.
Wind Power Concession Projects 037
Wind Power and the Environment6
038 China Wind Power Report · 2007
Renewable energy is clean and sustainable. Wind is
one of the most competitive and promising renewable
energies. But every coin has two sides. Wind energy
brings great environmental benefits but also negative
side ef fects. These effects include noise, v isual
intrusion, bird mortality and electromagnetic radiation.
Compared with conventional power generation, however,
wind power has few environmental effects and these are
avoidable.
6.1 Environmental Benefits of Wind Power
According to the Fourth Assessment Report released by
the Intergovernmental Panel on Climate Change (IPCC),
the warming of the earth over the past half century has
been caused by human activities (greater than 90%
certainty). The main culprits are the greenhouse gases
emitted by burning of fossil fuels, in particular carbon
dioxide (CO2). Wind power can provide energy whilst
reducing the emission of CO2. According to the World
Energy Commission, using one million kWh of wind power
will save 600 tons of CO2 emission. Therefore massive use
of wind power will help mitigate climate change.
The use of wind power can also avoid regional
environmental problems brought about by the burning of
coal. According to the NDRC, SO2 and smoke emitted by
the burning of coal account for 70%-80% of the total. Acid
rain caused by SO2 already covers one third of the land in
China. Pollution has serious impacts on socio-economic
development and the health of the people. The World Bank
estimates that the environmental and health losses caused
by air pollution will reach 13% of GDP by 2020.
6.2 Environmental Impacts of Wind Power
6.2.1 Noise
The noise of wind farms come from two sources:
mechanical noise and airflow noise. The mechanical noise
is made by the generator, gearbox and blades whereas the
airflow noise occurs when the air flows across the blades
and the turbines. With the increasing sophistication of
manufacturing technology, the noise from wind turbines is
generally decreasing. Compared with other noise sources
such as transportation, construction and industry, the
noise from wind turbines is also very low. Wind farms are
generally constructed far away from the residential areas
and have little impact on the lives of people.
Noise source Noise density /dB
Jet plane engine 250 metres away 105
Electric drill 7 metres away 95
48 km/h truck 100 metres away 65
64 km/h car 100 metres away 55
Wind farms 350 metres away 35-45
Bedroom 35
Village at midnight 20-40
Table 6 Comparison of noise sources
Wind Power and the Environment 039
6.2.2 Visual impact
China is rich in wind resources in remote or coastal areas.
The population density near wind farms is generally very
low and they are mostly built on hills with poor soil, seldom
in places with fertile land or plenty of water resources. Even
in agricultural or coastal areas, grazing or drying seafood
can still be carried out where wind farms are located.
Most people treat white wind turbines as a beautiful sight
and symbolic of a clean environment and sustainability.
Relativity applies to everything, but wind farms bring much
less visual damage than fossil fuel or nuclear plants,
regardless of other environmental pollution.
Currently, wind farms are used as a tourist attraction
in many places in China. For example, from June to
September, a number of tourists visit the Huitengxile wind
farms in Inner Mongolia - riding horses, looking at flowers,
eating barbecued lamb or having a fire party. The income
to the local herdsmen from tourism could represent half of
their total income.
6.2.3 Impact on birds
The construction of wind farms can result in impacts for the
habitat, breeding and feeding of birds. The turning blades
can also kill flying birds. According to Chinese regulations
an environment assessment should be made before a
construction project is started. This report must include the
impact on birds. The assessment must also address the
issue of whether the location of the wind farm is on a bird
migration route.
In general, birds are familiar with their surrounding
location and when they find a newly built wind farm, they
will select other places to fly. Improving technology has
also reduced the speed of the blades compared to older
designs of the same capacity, thus reducing the harm to
birds. According to a study in the United States, the level
of accidents to birds caused by wind turbines represents
just 0.01%-0.02% of all bird accidents. A 2003 study in
Spain indicated that the 692 wind turbines in 18 wind farms
caused the death of 89 birds, 0.13 birds per wind turbine.
A report produced by the UK's Royal Society for the
Protection of Birds confirmed that the greatest long term
threat to birds comes from climate change. Changes in
plants and the lifecycles of insects will make some places
unsuitable for birds. According to the latest research,
climate change will cause the extinction of one third of
animals and plants, including birds, by the middle of the
21st century. Compared to such an outcome, the harm
caused by wind turbines is insignificant.
6.2.4 Electromagnetic radiation
Electromagnetic radiation is line-frequency radiation
generated when electronic equipment is operating. In a
wind farm the radiation is created by the generator, electric
motor, electricity substation and transmission line. The
radiation generated by the generator and electric motor
is comparatively weak. If the capacity of the electricity
substation and transmission line is over 100kV, the
radiation generated must be taken into account. At below
100 kV, the radiation is much less strong.
6.2.5 Environmental impacts of offshore
wind farms
There are presently no commercial offshore wind farms
in China, although pilot projects are ongoing. Europe has
the largest number of offshore wind farms in operation.
Offshore wind farms can bring two side effects. One
is electromagnetic disturbance, the other is noise. The
magnetic field generated by the transmission line could
have an impact on both sea animals and plants. To avoid
this electromagnetic field, multi-conducting cables are
used. With regard to noise, some research indicates that
the noise made by wind turbines is at the same level as
040 China Wind Power Report · 2007
a rough estimate, if 30GW of wind power was installed in
China by 2020 and the annual power generation reached
60 billion kWh, the emission reduction of SO2 and CO2
would be 900 million tons and 36 million tons respectively.
At the same time, 420 million tons of solid pollutants would
be also reduced. Looked at another way, if we don't use
clean and renewable energy but rely on fossil fuels, the
resource will eventually be exhausted and the pollution and
climate change brought about by using fossil energy will
prove fatally damaging to the human environment.
that of fishing boats and waves, thus having little impact
on sea animals or plants. Practical experience shows that
some sea creatures enjoy living around the foundations
of wind turbines in Europe's North Sea, and even lay their
eggs there.
To summarise, wind power has little negative impact
on the environment. On the other hand it plays a very
important role in terms of improving the energy structure,
reducing environmental pollution and greenhouse gas
emissions and slowing down climate change. According to
Wind Power and the Environment 041
Key Regions for WindPower Development7
042 China Wind Power Report · 2007
The wind resource is distributed unevenly in China. The
northern part and coastal areas are rich in wind, and it
also varies from province to province. The places with the
richest wind resource include Inner Mongolia, Xinjiang,
Hebei, Jilin, Liaoning and Guangdong①. The details are
described below.
7.1 Inner Mongolia Autonomous Region
7.1.1 Wind Resource
The area with a wind density higher than 150W/m2 at
a height of 10 metres covers about 105,000km2. The
technically exploitable capacity is 150GW. The areas with a
rich wind resource range from east Hulunbeierxi rangeland
to Bayanzhaer.
The first wind farm was built at Zhurihe in Suniteyouqi
in 1989, where 100kW wind turbines with variable pitch
from the United States were installed. In the 1990s, the
focus was on the development of Huitengxile wind farm of
Chayouzhongqi, using turbines made in Denmark and the
US. By the end of 2004, the total installed capacity was
69MW. After 2004, the development of wind farms in the
eastern part of Inner Mongolia was accelerated. Several
100MW wind farms were built, such as Saihanba wind farm
in Keshiketengqi and Sunjiaying in Wengniuteqi.
By the end of 2006, the total installed capacity in Inner
Mongolia reached 509MW, of which 182MW was installed in
the western part of Inner Mongolia and 327MW in the east.
7.1.2 Electricity Price
In 2005, the gr id-connected electr ic i ty pr ice for
desulphurised coal-fired electricity was 0.257 yuan/
kWh. By comparison, in the 200MW concession project
at Damaoqibayin, with estimated working hours at full
operation of about 2,380 hours,the bidding price was
0.4656Yuan/kWh. In the 300MW concession project at
Huitengliang in Xilinhaote, with estimated working hours at
full operation of about 2,730 hours, the bidding price was
0.4200Yuan/kWh. The electricity price for non-bidding
projects is about 0.5Yuan/kWh (without tax) or 0.55Yuan/
kWh (with tax). The grid-connected electricity price for
wind power approved by the central government is about
0.54Yuan/kWh (with tax). The grid-connected electricity
price for wind power in Inner Mongolia is therefore around
0.54Yuan/kWh.
7.1.3 Grid
The west part beyond Xilinhaote belongs to the West Inner
Mongolia Grid whilst Chifeng in the east is connected to the
North-east Grid. A transmission line is needed if the wind
farms are to be developed at a large scale. By the end of
2005, the total of grid-connected power generation in full
operation was 9.31GW, with 8.95GW on the West Inner
Mongolia grid, 465MW on the Chifeng grid and 378MW on
the Tongliao grid.
7.1.4 Manufacturing Industry
A wind turbine assembly factory has been established
by the Xinjiang Gold Wind Technology Company and the
German-Sino Ruineng North Wind Corporation.
7.2 Hebei Province
7.2.1 Wind Resource
The area with a wind density higher than 150W/m2 at
a height of 10 metre high covers about 7,378km2. The
technically exploitable wind capacity is 8.69GW. The areas
with a rich wind resource are Bashang in Zhangjiakou,
Weichang and Fengning in Chengde and Huangye
harbour.
① The main contents of this chapter is provided by Mr. Shi Pengfei.
Key Regions for Wind Power Development 043
In 1996, the first wind farm was built near Huicai in
Zhangbei. The installed capacity was 10MW, using wind
turbines from Denmark, Germany and the US. After 2001,
new wind farms began to use national wind turbines made
by the Golden Wind Company. Some turbines have been
installed in Longhua. By 2006, the total installed capacity
of Hongsongwa wind farm in Weichang was 106MW.
By the end of 2006 the total installed capacity in Hebei
was about 326MW. Of this, 218MW was installed in
Zhangjiakou and 108MW in Chengde.
7.2.2 Electricity Price
In 2005, the gr id-connected electr ic i ty pr ice for
desulphurised coal-fired electricity was 0.345Yuan/kWh.
In the southern part of Hebei the price was 0.339Yuan/
kWh. By comparison, in the 200MW concession project
at Shanhe in Zhangbei, with estimated working hours
at full operation of about 2,370hours, the price was
0.5006Yuan/kWh (without tax). Electricity prices for non-
bidding projects were about 0.55-0.60Yuan/kWh (without
tax) or 0.60-0.65Yuan/kWh (with tax). The grid-connected
electricity price approved by the central government is 0.54
Yuan/kWh (without tax) and 0.61Yuan/kWh (with tax). The
grid-connected electricity price for wind power in Northern
Hebei is therefore 0.54Yuan/kWh and 0.61Yuan/kWh in
other parts of the province.
7.2.3 Grid
The northern part of Hebei belongs to the Jingjintang Grid.
The total installed capacity in 2005 was 29GW, expected to
increase to 36GW by 2010 and 57GW by 2020. The wind
sites at Bashang in Zhangjiakou and the northern part of
Chengde are located at the end of the grid. A transmission
line is needed if the wind farms are to be developed on a
large scale.
7.2.4 Manufacturing Industry
There are many power companies and new energy
companies in the national high-tech development zone of
Hebei. The blade manufacturer Zhonghang Huiteng Wind
Power Company, controller manufacturer Kenuo Weiye
Company and wind turbine manufacturers Huide Wind
Engineer Company and Boding Tianwei Wind Technology
Company are all located in the established wind power
section. At Longhua in Chengde, Golden Wind has also set
up an assembly plant producing 750kW turbines.
7.3 Liaoning Province
7.3.1 Wind Resource
The area with a wind density higher than 150W/m2 at a
height of 10 metres covers about 2,100km2. The technically
exploitable wind capacity is 2.52GW. The areas with a rich
wind resource are along the coastal areas and islands of
Liaodong peninsula as well as in the north-west part of
Liaoning near Inner Mongolia.
The first wind farm was built at Donggang in Wafangdian
in 1994, using wind turbines from Denmark and the US.
The first MW-level wind turbines were installed at Jiulongdi
in Bayuquna in 2001. Between 2000 and 2006 more wind
turbines made in China were installed there, as well as
a small number of turbines made by the joint venture
between Xi'an Weide Company and Tuomeide Company,
Shenxin Company and Huide Company. Shenyang
Industry University has recently carried out some tests at
this wind farm, which contributed to the localisation of the
wind turbines. Before 2002, wind farms were installed in
coastal areas or islands of the Liaodong peninsula, but
development has recently accelerated in the north-west
part of Liaoning, including a 50MW wind farm installed at
Zhangjia in Changtu.
044 China Wind Power Report · 2007
By the end of 2006, the total installed capacity in
Liaoning was 232MW, of which 94MW was installed in the
coastal area of Liaodong Peninsula and 138MW in the
north-west.
7.3.2 Electricity Price
In 2005, the gr id-connected electr ic i ty pr ice for
desulphurised coal-fired electricity was 0.347Yuan/kWh.
The price for wind power approved by the local government
ranges from 0.65Yuan/kWh to 0.70Yuan/kWh (with tax).
There is no grid-connected electricity price approved by
the central government.
7.3.3 Grid
By the end of 2005, the total installed capacity of the
province was 17.36GW, and is expected to reach 27GW
by 2010 and 50GW by 2050. Liaoning is the load centre
of the North-east Grid. The grid has no limitation for the
development of wind power.
7.3.4 Manufacture Industry
There are gearbox and generator manufacturers in Dalian.
Huarui Wind Technology Company, part of the Dalian
Heavy Industry Group, Huachuang Wind Energy Company
and GE (Shenyang) Wind Energy Company are all wind
turbine manufacturers.
7.4 Jilin Province
7.4.1 Wind Resource
The area with a wind density greater than 150W/m2 at a
height of 10 metres covers about 511km2. The technically
exploitable wind capacity is 600MW. The areas with rich
wind resources are Baicheng, Tongyu, Changling and
Shuangliao in the west.
The first wind farm was built at Gengsheng in Tongyu
in 1999, using wind turbines from Spain and Germany.
Five years later a second wind farm was installed in
Baicheng. Wind power developed very fast after that. In
2004, Longyuan Power Group and Huaneng New Energy
Company won the tender for the Tongyu Wind Concession
Project. The total installed capacity will be 400MW, which
will make it the largest wind farm in China. Longyuan and
Huaneng will install 200MW respectively and share a
single transformer station at Dongxinrong. By the end of
2006, the total installed capacity was 253MW.
7.4.2 Electricity Price
In 2005, the gr id-connected electr ic i ty pr ice for
desulphurised coal-fired electricity was 0.339Yuan/kWh.
By comparison, for the 200MW concession project at
Dongxinrong in Tongyu, with estimated working hours
at full operation of about 2,310 hours, the price was
0.5090Yuan/kWh. The electricity price for non-bidding
projects was about 0.5-0.6Yuan/kWh (without tax) or
0.55 -0.65Yuan/kWh (with tax). The grid-connected
electricity price approved by the central government is
0.61Yuan/kWh (with tax). The grid-connected electricity
price for wind power in the province is 0.61Yuan/kWh.
7.4.3 Grid
The western part of Jilin is far away from the load centre.
Driven by the wind concession projects and coordinated
by state and provincial governments, the State Grid, North
East Grid and Jilin Grid have together set up transmission
lines and transformer stations to address the issue of
developing large scale wind power.
7.4.4 Manufacturing Industry
At present there are no wind turbine or components
manufacturers.
Key Regions for Wind Power Development 045
7.5 Guangdong Province
7.5.1 Wind Resource
The area with a wind density greater than 150W/m2 at a
height of 10 metres covers about 2,024km2. The technically
exploitable wind capacity is 2.46GW. The areas with a rich
wind resource are the coastal areas and islands. Typhoons
are common in these areas, on the one hand contributing
to increased power generation, on the other threatening to
damage the wind turbines.
Guangdong has a long history of developing wind
power. The first wind farm was built on Nan'ao Island in
1989, using Swedish wind turbines, and later extended
with turbines from Denmark and the US. Some local
wind turbines were also demonstrated there. Niutouling
wind farm was the first to use foreign investment whilst
Shipeishan wind farm at Huilai was one of the first batch
wind concession projects. The total 100MW capacity was
supplied by Gold Wind. Honghaiwan wind farm was hit
by the “Dujuan” typhoon in September 2003 and nine
turbines were damaged, with a broken blade each. This is
the first accident in which wind farms have been affected
by a typhoon.
By the end of 2006, the total capacity of Guangdong
was 211MW, of which 152MW was installed in the coastal
area and 59MW on Nan'ao Island.
7.5.2 Electricity Price
In 2005, the gr id-connected electr ic i ty pr ice for
desulphurised coal-fired electricity was 0.439Yuan/kWh.
By comparison, for the 100MW concession project in
Huilai, with estimated working hours at full operation
of about 1,990 hours, the price was 0.5013Yuan/kWh.
Referring to the price of the wind concession projects, the
Gongdong government set the grid-connected electricity
price for wind power at 0.528Yuan/KWh.
7.5.3 Grid
At the end of 2005, apart from 10.88GWh from the
“transmitting electricity from the West to the East
Project”, the total installed capacity of power in the
province had reached 48.08GW. Of this 19.18GW came
from units an installed capacity over 300MW, accounting
for 40% of the total. Guangdong is the load centre of
the North-east Grid. The grid has no limitation for the
development of wind power.
7.5.4 Manufacturing Industry
Zhongshan Mingyang Wind Power Company is developing
1.5MW wind turbines designed by a German company but
self-patented. Test models are under demonstration now.
7.6 Xinjiang Uighur Autonomous Region
7.6.1 Wind Resource
The area with a wind density greater than 150W/m2 at a
height of 10 metres is about 80,000km2. The technically
exploitable capacity is 120GW. Areas with a rich wind
resource are Dabancheng, Xiaochaohu and the “wind
gate” of Ala Mountain, which has the geographic
advantage of increasing the wind speed.
Xinjiang was the first province to develop wind power
on a large scale. Some Danish turbines were installed
around Dabancheng for testing in 1986. The first wind farm
was established in 1989, using a Danish grant. Altogether
13 wind turbines with a capacity of 150kW each were
installed, reaching a total of 1.95MW. The wind farm was
the biggest at that time, and provided much experience of
046 China Wind Power Report · 2007
linking wind power to the grid. Xinjiang led the wind market
up to 2001, but due to the limited capacity of the grid
development subsequently slowed down.
By the end of 2006, the total installed capacity was
207MW, concentrated in Dabancheng, and with 2MW
located in Buerjin and the wind gate of Ala Mountain.
7.6.2 Electricity Price
In 2005, the grid-connected electricity price for desulphurised
coal-fired electricity was 0.235Yuan/kWh. The Xinjiang
government set the grid-connected electricity price for wind
power at 0.51Yuan/kWh and 0.47Yuan/kWh.
7.6.3 Grid
By the end of 2006, the total installed capacity in Xinjiang
had reached 7.52GW, with 1.57GW from hydro power
(20.9%), 5.29GW from coal (70.3%), 470MW from natural
gas (6.3%) and 190MW from wind power (2.5%). Xinjiang
has a large area but small power demand. The major
bottleneck for developing wind power is limited grid and
transmission capacity.
7.6.4 Manufacturing Industry
Xinjiang was the first province to promote localisation of
wind turbine manufacture. In 1997 Xinjiang Wind Energy
Company signed a contract with the German Jacobs
business to manufacture gearboxes and generators in
China. They replaced all the components from Jacobs with
their own products, testing and improving their product
quality based on lessons learned and eventually bringing
their own version of Jacobs turbines to the market,
establishing the Xinfeng Tech and Industry Company.
The name was later changed to Xinjiang Golden Wind
Company, which is a stock holding company rather than
a state-owned company. Over the next ten years Golden
Wind gained the largest share of the national wind turbine
market.
Golden Wind has two manufacturing factories in
the Economic and Technology development zone of
Wulumuqi and one national wind engineering centre.
Apart from R&D and the production of wind turbines, they
have also assigned one workshop to LM of Denmark
for blade manufacture. Outside Xinjiang, Golden Wind
has established the Chengde Longhua Factory and two
assembly workshops in Beijing and Baotou. Finally, they
have set up a German Golden Wind Company to carry out
R&D and develop an international market.
7.7 Jiangsu Province
7.7.1 Wind Resource
The total wind resource amounts to 34.69GW. The
technically exploitable area covers about 1,505km2, with a
capacity of 1.77GW. The wind resource decreases steadily
as you move away from the coast. The coastal and Taihu
Lake areas are rich in wind resources whilst the inland
resource is relatively poor. There is a sharp contrast in
wind resources between the east and the west.
Jiangsu has witnessed a rapid development of wind
power in recent years. From 2003 to 2005, Jiangsu
joined the national concession projects bidding for three
consecutive years. The total bidding was for 450MW. Four
further wind farms with an installed capacity of 200MW
each will be developed following the conditions of the
concession projects. By the end of 2006, the total installed
capacity in Jiangsu had reached 108MW, with all 68
turbines installed in Rudong County.
7.7.2 Electricity Price
In 2005, the gr id-connected electr ic i ty pr ice for
desulphurised coal-fired electricity was 0.371Yuan/kWh.
Key Regions for Wind Power Development 047
The bidding price for wind power was 0.4365Yuan/kWh,
0.4877Yuan/kWh and 0.519Yuan/kWh (with no tax). The
grid-connected electricity price for wind power in Jiangsu
is relatively low.
7.7.3 Grid
Jiangsu is part of the Huadong Grid and composed mainly
of coal-fired power stations. There is a great demand
for coal, 80% of which comes from other provinces.
Wind power will help improve the power structure of
the province, help solve power shortages and promote
economic development and environmental protection.
7.7.4 Manufacturing Industry
A joint venture Nantong A Wanyuan Wind Equipment
Manufacturing Company has been set up by the Beijing
Wanyuan Industrial Company, Spain Acciona Energy
Group and Inceisa Industrial and Trading Co. Ltd in the city
of Nantong. The company has started producing 1.5MW
turbines. Nangaochi Company also produces gearboxes
whilst other companies manufacture parts such as towers.
7.8 Shandong Province
7.8.1 Wind Resource
The total wind resource amounts to 61.50GW. The
technically exploitable area is about 619km2, with a
capacity of 950MW. The wind resource is concentrated in
islands, peninsulas and high mountains. The average wind
speed at a height of 70 metres is about 5.4-8.0 metres/
second, giving an annual average wind power density of
about 220-580W/m2. The period during which wind speed
is over 3m/s is between 7,000 and 8,000 hours.
Wind power development in Shandong started in the
1980s. In 1983, three wind turbines with an installed
capacity of 55kW were imported from Denmark, three of
which were installed at Malan Bay in Chenshantou, part of
Rongchen City. One of the turbines was used as a test unit.
Two turbines produced locally were installed in October
1989. By the end of 2006, the total installed capacity of
wind power in Shandong had reached 148.5MW, ranking it
the 10th province in China.
7.8.2 Electricity Price
In 2005, the gr id-connected electr ic i ty pr ice for
desulphurised coal-fired electricity was 0.33Yuan/kWh.
There has been no successful bidding project in Shandong
so far. The non-bidding electricity price is around
0.5-0.7Yuan/kWh (without tax) or 0.55-0.78Yuan/kWh
(with tax).
7.8.3 Grid
The grid is dominated by fossil fuel-fired power stations,
with 99% of the power coming from coal. 40% of this is
imported from other provinces. During the 11th five year
plan, Shandong will speed up the construction of a 500kV
main grid.
7.8.4 Manufacturing Industry
There are no wind power equipment manufacturing
companis in Shandong.
China Wind Power Report · 2007 048
Development Outlook and Policy Recommendations8
Development Outlook and Policy Recommendations 049
8.1 Lessons Learned
The current development trend convinces us that we will
meet the 2010 target of 5 million kW of installations by the
end of 2008, two years ahead of schedule. This means
that it will be easily achievable to reach 30 million kW of
installations by 2020. The long term target is to make wind
power competitive with conventional power technology
by 2020 and become the third major source of electricity
following hydro and fossil fuels.
Once the installed capacity has reached at least 30
million kW, the government should make every effort
to increase wind power to 100 million kW, when it will
contribute 10% of total power capacity. The aim should
then be to increase the installed capacity of wind power
to 500 million or 1 billion kW by around 2040 or 2050,
representing 20% of total installed capacity. In order to
meet this target, we need to spend five to ten years (2010
to 2015) on establishing a strong technical and industrial
foundation for the wind power industry. The following
measures should be considered.
1. We should clarify the short term and long term targets
for wind power. Strategically, the main goal up to 2020
should be to encourage the localisation of wind equipment
manufacturers, reducing the cost of wind turbines, which
normally account for 70% of total wind project costs.
Another important goal should be to promote the economic
development of poor areas with rich wind resources.
2. We should learn the lessons from the wind
concession projects and develop dozens of large wind
farms with a capacity of 100 or 300MW each. At the same
time we should adopt feed-in-tariff policies so as to
encourage the development of small scale wind projects
and establish a stable wind power market.
3. The wind turbine manufacturers should grasp the
opportunity of increasing their market by scaling up their
production capacity, importing international advanced
technology and producing new generation wind turbines,
especially MW-rated products. They should learn the
lessons from experience so far, improve their R&D capacity
and reduce manufacturing cost. Even though wind turbine
and component manufacturers are not obliged to meet the
renewable energy quota, they should ensure the quality of
their products and receive a reasonable profit.
4. The development of wind power depends on the
status of the local economy and the grid capacity. In
coastal areas where the economy is well developed but
there is a shortage of energy, wind power should be rapidly
expanded. In western China, rich in wind resources, wind
power should be promoted by increasing the grid capacity.
5. Full use should be made of the various mechanisms
under the international climate change agreements.
Records show that 90% of non-concession wind projects
in China have applied to be registered under the Kyoto
Protocol's Clean Development Mechanisms since 2005.
Additional funding generated through the CDM credits
could further stimulate the growth of wind power. The
international carbon market will continue to provide
additional incentives for the Chinese wind market in terms
of money and technology.
6. The development of large-scale wind projects should be
combined with decentralised projects. Decentralised energy
systems will become an important form of future development.
In Germany, for example, there is no single wind farm
exceeding 100MW yet the total installed capacity has
surpassed 18GW. It is therefore important to develop small to
medium sized wind farms, depending on the local resource.
When the rural grid connection has been strengthened, single
turbines can also be connected to the grid.
7. Preparations should be made for the development of
near-shore wind power. Near-shore areas of the sea have
050 China Wind Power Report · 2007
higher and more predictable wind speeds, which helps
increase the efficiency of the wind turbines. Moreover, the
best near-shore wind resources are close to the eastern
coast, where the grid load is centered and therefore have
a regional advantage. Lessons should be learned from
foreign examples so as to start resource assessment and
prepare for large scale offshore wind farms in the future.
8. More investment should be made in R&D at the early
development stage of the industry. The focus should be on
quality rather than quantity. We should remind ourselves
that wind power is an investment for power generation over
more than 20 years in an exposed situation. The sustainable
and fast development of wind power in the future depends
on the serious lessons we are learning now.
8.2 Issues for wind power development
Wind power is a complex system, depending on wind
resources, wind equipment manufacture, wind farm
operation and grid construction. Although the Renewable
Energy Law was passed in 2006, and the development of
wind power in China offers good opportunities, there are
still some issues to be addressed.
1. Wind resource assessments, the foundation for
wind development planning, grid construction and wind
resource management, are not accurate enough. It is
therefore necessary to re-examine assessments of the
wind resource in both inland and offshore areas, combining
wind measurement data and modeling simulations. The
research into short range weather forecast and relevant
safety measures is also very important.
2. Innovation capacity is weak and a fully functioning
wind industry is not yet in operation. At present, China is
short of the technology to design and produce MW-scale
wind turbines and their key components. We have to take
action to support and promote technical innovation by the
companies, accelerate technology transfer and knowledge
and complete the manufacturing chain for turbine
components.
3. Grid construction and management has not kept
pace with the development of wind power. The variability
of wind power will impact on the projection of grid loads
and management of the grid. Wind power is not part
of the grid construction plan. There are no regulations
and instructions on how to connect wind power into the
grid. We should formulate management regulations and
technical specifications in order to bring wind power
into the grid planning system. We should also clarify the
relationship between wind power development and grid
extension, ensuring both the safe operation of the grid and
the reliable transmission of wind power.
4. The pricing system needs to be improved. The profit
for a wind project relies on the grid-connected price.
A wind project currently depends on the support of the
central government regardless of how the price is initially
decided. The current price for wind concession projects
is too low, leading to many non-profitable projects. At the
same time, low prices encourage a low manufacturing cost
for components, which leads to poor quality. This will do
harm to the wind power industry in a long run.
5. The public service system for supporting wind power
is inadequate. A national public service for wind power
could take advantage of existing technologies nationwide
and carry out basic R&D. Public service systems in
great demand at present include the State Wind Energy
Technology Centre, the State Demonstration Wind Farms,
the State Wind Turbine Testing and Demonstration
Platform, the State Wind Power Information Centre, the
State Wind Resource Assessment Centre and the State
Wind Power Testing and Certification Centre.
6. A standards and certification system for wind
power has been established, but yet to be improved. It is
Development Outlook and Policy Recommendations 051
important to accelerate the creation of technical supportive
systems for standards, guidelines, testing and certificates.
8.3 Risks involved in investing in wind power
Investors face a number of potential risks through their
involvement in wind power projects. These include:
1. Tariff risks. According to the No.7 Regulation
released by the NDRC in 2006, the wind tariff should be
decided through bidding. However, in reality the bidding
tariff coexists with an approved tariff. The electric price
varies a lot among different projects, many of which cannot
guarantee proper profit. Investors therefore have to make a
careful judgment as to whether a project will make a profit.
2. Wind resource risks. It is still difficult to calculate the
expected wind power generation over a 20 year lifespan
based on the current wind resource and micro location
assessments. It is quite common that the actual wind
generation is lower than the results from feasibility studies
before the construction.
3. Wind equipment risks. If the actual output of
the wind turbines is lower than that predicted by the
turbine manufacturer then the maintenance fees will
increase proportionately whilst the power generation will
decrease.
4. Grid connection risks. The Renewable Energy
Law states that “grid enterprises shall enter into
grid connection agreements with renewable power
generation enterprises that have legally obtained an
administrative license or for which fi l ing has been
made, and buy the grid-connected power produced by
renewable energy within the coverage of their power
grid, and provide grid-connection services for the
generation of power with renewable energy.” However,
these regulations have not been well implemented in
practice. The grid company should not be an obstacle
to wind development; instead it should try to improve its
own capacity and strengthen the grid connection in order
to support wind power.
8.4 Development Perspectives
Table 7 sums up three development scenarios for the
Chinese wind market. The “low-speed development
g o a l ” r e f e r s t o a c o n s e r v a t i v e s c e n a r i o , t h e
accomplishment of which should be guaranteed by the
existing policies. The “mid-speed development goal”
refers to a highly likely scenario, where some more
policy measures would be required. The “high-speed
development goal” is an optimistic estimate which
requires more investment in areas such as the feed-in-
tariff system, grid connection, decentralised systems and
R&D for offshore wind. The main difference among the
three scenarios lies in the judgment made about the rate
of development up to 2020, whilst the annual growth would
remain more or less the same after 2020.
Judging from the fact that newly installed capacity
reached 1.33GW in 2006, representing a 105% increase,
it is forecast that the governmental wind target of 5GW by
2010 will be achieved by late 2007 or early 2008. By then,
a domestic wind turbine manufacturing industry should
have been established. The quality of the products should
be further improved and matured, and the manufacturing
capacity should also be expanded. From 2007 onwards,
therefore, the annual increase in capacity should reach
50% and by 2010 the cumulative installed capacity should
be 12-13GW. If by 2010 the total installed capacity of
wind power could reach 12 GW, wind power electricity
generation would amount to 24TWh, which means that
wind would become an effective and important form of
alternative power.
052 China Wind Power Report · 2007
It should not be a problem to achieve the “low
target” of 40 GW by 2020. Based on the global annual
wind power growth rate of 28.3% over the past ten years,
this target could be achieved five years ahead. Based on
the current European annual wind growth rate of 19% ,
the level of annual newly installed capacity could reach
8GW. By 2020, therefore, the total installed capacity
could reach 70GW. By then, wind could account for 6%
of the total installed power capacity in China and 2.8% of
total power generation. If the policy environment could be
further improved, then the installed capacity could reach
120GW, requiring an average of 24% growth between
2010 and 2020.
From 2020 onwards, wind should already be competitive
with traditional power generation. According to the “low-
speed development goal”, with the annual newly installed
capacity set according to the European level of 8GW,
by 2030 total installed capacity could reach 120GW.
According to the “mid-speed development goal”, with
annual newly installed capacity at over 11GW, which
means a 30% growth rate (the same percentage level as in
the EU over the last five years), then by 2030 total installed
capacity could reach 180GW. Under this scenario, wind
would account for 11% of the total installed power capacity
and 5.7% of total electricity generation. According to the
“high-speed development goal”, after 2020 the wind
market will maintain an annual installed capacity of 14GW,
reaching an installed capacity of 270 GW by 2030. Under
this scenario, wind would account for 16% of the total
installed power capacity and nearly 8.6 % of total electricity
generation.
After 2030, most of the exploitable hydro resources
would have been developed. Wind power would become
the major form of power industry construction, with its
important social and environmental benefits, mature
technology and decreasing costs. By 2050, the installed
capacity of wind power could reach 400-600GW. By that
time, wind power would be the third largest power source
after fossil fuels and hydro power.
Year
Development Scenario (Low)
Development Scenario (Mid)
Development Scenario (High) Global
Annual Growth
estimated byGWEC
/%
Installed Capacity
/GW
Yearly Average
Yearly Average
Installed Capacity
/GW
Yearly Average
Yearly Average Installed
Capacity/GW
Yearly Average
Yearly Average
Newly Installed
/GW
Growth Rate/%
Newly Installed
/GW
Growth Rate/%
Newly Installed
/GW
Growth Rate/%
2006 2.6 2.6 2.6
2010 8 1.35 32.4 10 1.85 40.0 13.16 2.64 55.0 18.0
2015 20 2.4 20.1 30 4 24.6 48.87 7.14 30.0 18.0
2020 40 6.4 14.9 70 8 18.5 122.12 14.65 20.1 14.0
2030 120 8 11.6 180 11 9.9 268.56 14.65 8.2 7.0
2040 250 13 7.6 300 12 5.2 429.20 16.06 4.8 2.0
2050 400 15 4.8 450 15 4.1 611.30 18.21 3.6 0.5
Table 7 Projection of wind power development in China
Development Outlook and Policy Recommendations 053
8.5 Policy recommendations
In order to implement the Renewable Energy Law, address
the problems mentioned above and obtain sustainable,
rapid and regulated development of the wind power
industry, the following actions are recommended.
8.5.1 Further improve the support systems
Improve the pricing system for renewable energy. The
Renewable Energy Law states that “the grid-connected
price for renewable energy should be decided on the
principle of being beneficial to the development and
utilisation of renewable energy and being economic
and reasonable, with timely adjustment being made on
the basis of the development of the technology and the
utilisation of renewable energy.” It is essential to set a
reasonable and economic price for wind power in order to
promote its development and utilisation.
So far, the government has introduced the “Temporary
Implementation Rules for Setting up Feed-in Tariffs for
Renewable Energy Power and the Sharing of Expenses
in Purchasing Electricity from Renewable Energy”, which
means that an additional charge for renewable electricity
is shared nationwide, balancing out the provinces through
their utilities. However, we should further develop these
rules and make the system work efficiently. Wind power is
in its infancy and only a stable wind power market will be
attractive to investors.
Finally, we should strengthen the financial investment
and taxation policies. It is recommended that favourable
VAT and income tax policies for wind farms and wind
equipment manufacture should be introduced. We
should conduct research and studies into a combination
of policies, such as low interest loans for R&D on wind
turbines and purchase of local wind turbines and wind
projects, with an extended loan period. These measures
will contribute to reducing the costs and accelerating the
development of wind power.
8.5.2 Increase investment
The key period for the wind power industry is from now
to 2010. Both basic R&D and a growing wind industry
depend on investment from the government. Special
funds are needed to carry out wind resource diversity
assessments, grid construction to connect large scale wind
farms, R&D for MW-scale wind turbines with their own
patent, draft standards and regulations, the construction
of demonstration wind farms and a public testing platform,
wind resource assessments, professional training and
capacity building. Only a complete financial programme
can guarantee the rapid and healthy development of the
wind power industry.
8.5.3 Further improve the regulatory
system
The wind power industry is still small at present and it is
easily coordinated by the government. Besides, it is not
possible to set up a special department for managing
the wind power industry. However, the industry involves
the interests of many departments and has a very
large manufacturing chain. Although the obligations of
different departments towards the grid, power generation,
meteorology, technical R&D, regulations and standards,
equipment manufacturers and industrialisation are clearly
described in the Renewable Energy Law, each department
has its own plan, investment arrangement, cooperation
units and priority projects. The Ministry of Science and
Technology, for example, has listed R&D for wind power
technology in its research and development guidelines and
the investment is increased annually. Quite separately,
the State Fund for Nature Science has also planned
China Wind Power Report · 2007 054
funding for basic R&D in wind power technology. It is not
clearly described in the Renewable Energy Law how to
combine these interests and take advantage of different
departments to develop wind power in a healthy and rapid
way. We should therefore set up an efficient coordination
system which creates a good environment for wind power,
a clearly important and promising energy source for the
future.
The first step should be to establish a unique and
powerful management system, taking advantage of
national resources such as the State Wind Energy
Technology Centre, the State Wind Energy Resource
Assessment Centre and the State Wind Power Testing
and Certification Centre. We should make good use of
both finance and technology, carry out technical R&D and
implement large wind power projects.
Figures & Tables 055
Figure 1 Turbine capacity types installed at end of 2006
Figure 2 Cumulative and annual installed capacity of wind power 1995-2006
Figure 3 Market share of domestic and foreign wind turbines, 2004-2006
Figure 4 Average electricity price for current wind power projects at the end of 2006
Figure 5 First round of wind power concession projects
Figure 6 Second round of wind power concession projects
Figure 7 Third round of wind power concession projects
Figure 8 Fourth round of wind power concession projects
Table 1 Installed capacity of wind power by province in 2006
Table 2 Comparison of contract prices for wind concession projects with feasibility
and bidding prices
Table 3 Major wind turbine manufacturers
Table 4 Main component manufacturers in China
Table 5 Approved price for some non-concession wind projects in 2007
Table 6 Comparison of noise sources
Table 7 Projection of wind power development in China
Figures & Tables
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